3 Buy-Rated Dividend Stocks Leading The Pack: GLP, AHGP, TCRD

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer

TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.

While plenty of high-yield opportunities exist, investors must always consider the safety of their dividend and the total return potential of their investment. It is not uncommon for a struggling company to suspend high-yielding dividends which could subsequently result in precipitous share price declines.

TheStreet Ratings' stock rating model views dividends favorably, but not so much that other factors are disregarded. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.

These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel — rather, use them as a starting point for your own research.

The following pages contain our analysis of 3 stocks with substantial yields, that ultimately, we have rated "Buy."

Global Partners

Dividend Yield: 8.00%

Global Partners (NYSE: GLP) shares currently have a dividend yield of 8.00%.

Global Partners LP, a midstream logistics and marketing company, distributes gasoline, distillates, residual oil, renewable fuels, crude oil, natural gas, and propane to wholesalers, retailers, and commercial customers in the New England states and New York. The company has a P/E ratio of 11.93.

The average volume for Global Partners has been 157,200 shares per day over the past 30 days. Global Partners has a market cap of $1.1 billion and is part of the wholesale industry. Shares are up 2.7% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Global Partners as a buy. Among the primary strengths of the company is its attractive valuation levels, considering its current price compared to earnings, book value and other measures. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • GLP, with its decline in revenue, slightly underperformed the industry average of 38.7%. Since the same quarter one year prior, revenues fell by 41.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • GLOBAL PARTNERS LP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, GLOBAL PARTNERS LP increased its bottom line by earning $3.96 versus $1.43 in the prior year. For the next year, the market is expecting a contraction of 50.5% in earnings ($1.96 versus $3.96).
  • The gross profit margin for GLOBAL PARTNERS LP is currently extremely low, coming in at 6.43%. Regardless of GLP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.02% trails the industry average.
  • The share price of GLOBAL PARTNERS LP has not done very well: it is down 14.22% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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Alliance Holdings GP

Dividend Yield: 9.10%

Alliance Holdings GP (NASDAQ: AHGP) shares currently have a dividend yield of 9.10%.

Alliance Holdings GP, L.P., through its subsidiaries, produces and markets coal primarily to utilities and industrial users in the United States. It produces a range of steam coal with varying sulfur and heat contents. The company has a P/E ratio of 8.72.

The average volume for Alliance Holdings GP has been 84,300 shares per day over the past 30 days. Alliance Holdings GP has a market cap of $2.5 billion and is part of the metals & mining industry. Shares are down 32.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Alliance Holdings GP as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, attractive valuation levels, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 38.7%. Since the same quarter one year prior, revenues slightly increased by 3.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ALLIANCE HOLDINGS GP LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $161.06 million or 15.42% when compared to the same quarter last year. In addition, ALLIANCE HOLDINGS GP LP has also vastly surpassed the industry average cash flow growth rate of -53.29%.
  • 38.99% is the gross profit margin for ALLIANCE HOLDINGS GP LP which we consider to be strong. Regardless of AHGP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AHGP's net profit margin of 11.69% compares favorably to the industry average.

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THL Credit

Dividend Yield: 11.30%

THL Credit (NASDAQ: TCRD) shares currently have a dividend yield of 11.30%.

THL Credit, Inc. is a business development company specializing in direct and fund of fund investments. The fund seeks to invest in debt and equity securities of middle market companies. The company has a P/E ratio of 9.56.

The average volume for THL Credit has been 115,800 shares per day over the past 30 days. THL Credit has a market cap of $408.2 million and is part of the financial services industry. Shares are up 2.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates THL Credit as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, increase in net income, growth in earnings per share and good cash flow from operations. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • TCRD's revenue growth has slightly outpaced the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 13.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for THL CREDIT INC is rather high; currently it is at 65.70%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 65.49% significantly outperformed against the industry average.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Capital Markets industry average. The net income increased by 41.7% when compared to the same quarter one year prior, rising from $10.98 million to $15.56 million.
  • Net operating cash flow has significantly increased by 159.26% to $49.43 million when compared to the same quarter last year. Despite an increase in cash flow, THL CREDIT INC's cash flow growth rate is still lower than the industry average growth rate of 191.30%.
  • THL CREDIT INC has improved earnings per share by 43.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, THL CREDIT INC reported lower earnings of $1.07 versus $1.45 in the prior year. This year, the market expects an improvement in earnings ($1.39 versus $1.07).

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