Buy-Rated Dividend Stocks: Top 3 Companies: TLLP, LTC, NS

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."

Tesoro Logistics

Dividend Yield: 6.50%

Tesoro Logistics (NYSE: TLLP) shares currently have a dividend yield of 6.50%.

Tesoro Logistics LP owns, operates, develops, and acquires logistics assets related to crude oil and refined products in the United States. It operates in three segments: Gathering, Processing, and Terminalling and Transportation. The company has a P/E ratio of 21.20.

The average volume for Tesoro Logistics has been 490,700 shares per day over the past 30 days. Tesoro Logistics has a market cap of $4.6 billion and is part of the energy industry. Shares are down 1.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Tesoro Logistics as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, compelling growth in net income, good cash flow from operations and growth in earnings per share. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 23.9%. Since the same quarter one year prior, revenues rose by 14.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TESORO LOGISTICS LP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 53.3% when compared to the same quarter one year prior, rising from $60.00 million to $92.00 million.
  • Net operating cash flow has slightly increased to $161.00 million or 5.92% when compared to the same quarter last year. In addition, TESORO LOGISTICS LP has also vastly surpassed the industry average cash flow growth rate of -49.64%.
  • TESORO LOGISTICS LP's earnings per share improvement from the most recent quarter was slightly positive. 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, TESORO LOGISTICS LP increased its bottom line by earning $2.34 versus $1.42 in the prior year. This year, the market expects an improvement in earnings ($2.75 versus $2.34).

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LTC Properties

Dividend Yield: 4.10%

LTC Properties (NYSE: LTC) shares currently have a dividend yield of 4.10%.

LTC Properties, Inc. operates as a health care real estate investment trust (REIT) in the United States. The company has a P/E ratio of 25.90.

The average volume for LTC Properties has been 247,700 shares per day over the past 30 days. LTC Properties has a market cap of $2.0 billion and is part of the real estate industry. Shares are up 22.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates LTC Properties as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, expanding profit margins, good cash flow from operations and growth in earnings per share. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 11.9%. Since the same quarter one year prior, revenues rose by 23.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The gross profit margin for LTC PROPERTIES INC is currently very high, coming in at 77.98%. Regardless of LTC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LTC's net profit margin of 51.08% significantly outperformed against the industry.
  • Net operating cash flow has slightly increased to $19.61 million or 9.74% when compared to the same quarter last year. Despite an increase in cash flow, LTC PROPERTIES INC's average is still marginally south of the industry average growth rate of 11.78%.
  • LTC PROPERTIES INC has improved earnings per share by 12.8% 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, LTC PROPERTIES INC reported lower earnings of $1.95 versus $1.99 in the prior year. This year, the market expects an improvement in earnings ($2.19 versus $1.95).

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NuStar Energy

Dividend Yield: 8.90%

NuStar Energy (NYSE: NS) shares currently have a dividend yield of 8.90%.

NuStar Energy L.P. engages in the terminalling, storage, and marketing of petroleum products; and transportation of petroleum products and anhydrous ammonia. It operates through three segments: Pipeline, Storage, and Fuels Marketing. The company has a P/E ratio of 20.51.

The average volume for NuStar Energy has been 363,600 shares per day over the past 30 days. NuStar Energy has a market cap of $3.8 billion and is part of the energy industry. Shares are up 24.2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates NuStar Energy as a buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and notable return on equity. 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:
  • 42.27% is the gross profit margin for NUSTAR ENERGY LP which we consider to be strong. It has increased significantly from the same period last year. Along with this, the net profit margin of 14.14% significantly outperformed against the industry average.
  • NS, with its decline in revenue, slightly underperformed the industry average of 23.9%. Since the same quarter one year prior, revenues fell by 26.9%. 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 Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 55.1% when compared to the same quarter one year ago, falling from $127.90 million to $57.40 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, NUSTAR ENERGY LP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.

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