3 Buy-Rated Dividend Stocks: CMP, CCI, T

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."

Compass Minerals International

Dividend Yield: 4.10%

Compass Minerals International (NYSE: CMP) shares currently have a dividend yield of 4.10%.

Compass Minerals International, Inc. produces and markets salt, sulfate of potash specialty fertilizer (SOP), plant micronutrients, and magnesium chloride primarily in North America and the United Kingdom. The company has a P/E ratio of 14.51.

The average volume for Compass Minerals International has been 405,600 shares per day over the past 30 days. Compass Minerals International has a market cap of $2.3 billion and is part of the metals & mining industry. Shares are down 9.2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Compass Minerals International as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • 41.06% is the gross profit margin for COMPASS MINERALS INTL INC which we consider to be strong. It has increased from the same quarter the previous year.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 38.1%. Since the same quarter one year prior, revenues fell by 33.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Metals & Mining industry average, but is less than that of the S&P 500. The net income has significantly decreased by 27.4% when compared to the same quarter one year ago, falling from $80.50 million to $58.40 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Metals & Mining industry and the overall market, COMPASS MINERALS INTL INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The debt-to-equity ratio of 1.14 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, CMP's quick ratio is somewhat strong at 1.21, demonstrating the ability to handle short-term liquidity needs.

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Crown Castle International

Dividend Yield: 4.10%

Crown Castle International (NYSE: CCI) shares currently have a dividend yield of 4.10%.

Crown Castle International Corp., together with its subsidiaries, owns, operates, and leases shared wireless infrastructure in the United States and Australia. The company has a P/E ratio of 59.83.

The average volume for Crown Castle International has been 2,590,800 shares per day over the past 30 days. Crown Castle International has a market cap of $28.8 billion and is part of the telecommunications industry. Shares are up 0.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Crown Castle International as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins, growth in earnings per share and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.9%. Since the same quarter one year prior, revenues slightly increased by 2.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has slightly increased to $501.49 million or 5.82% when compared to the same quarter last year. In addition, CROWN CASTLE INTL CORP has also modestly surpassed the industry average cash flow growth rate of 3.63%.
  • The gross profit margin for CROWN CASTLE INTL CORP is rather high; currently it is at 63.84%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CCI's net profit margin of 14.91% significantly trails the industry average.
  • CROWN CASTLE INTL CORP has improved earnings per share by 11.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, CROWN CASTLE INTL CORP increased its bottom line by earning $1.44 versus $0.90 in the prior year. For the next year, the market is expecting a contraction of 16.0% in earnings ($1.21 versus $1.44).
  • 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CROWN CASTLE INTL CORP's return on equity is below that of both the industry average and the S&P 500.

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AT&T

Dividend Yield: 4.90%

AT&T (NYSE: T) shares currently have a dividend yield of 4.90%.

AT&T Inc. provides telecommunications and digital entertainment services. The company operates through four segments: Business Solutions, Entertainment Group, Consumer Mobility, and International. The company has a P/E ratio of 16.54.

The average volume for AT&T has been 28,491,400 shares per day over the past 30 days. AT&T has a market cap of $241.1 billion and is part of the telecommunications industry. Shares are up 12.3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates AT&T as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, 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:
  • T's revenue growth has slightly outpaced the industry average of 14.7%. Since the same quarter one year prior, revenues rose by 22.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • AT&T INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, AT&T INC increased its bottom line by earning $2.36 versus $1.23 in the prior year. This year, the market expects an improvement in earnings ($2.85 versus $2.36).
  • Net operating cash flow has significantly increased by 59.87% to $9,185.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 46.21%.
  • The gross profit margin for AT&T INC is rather high; currently it is at 53.47%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.51% trails the industry average.

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