3 Buy-Rated Dividend Stocks To Check Out: DRH, CALM, F

These 3 dividend stocks are rated a Buy by TheStreet
By TheStreet Wire ,

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."

Diamondrock Hospitality

Dividend Yield: 4.20%

Diamondrock Hospitality

(NYSE:

DRH

) shares currently have a dividend yield of 4.20%.

DiamondRock Hospitality Company, a lodging focused real estate company, owns premium hotels and resorts in North America. The company has a P/E ratio of 16.40.

The average volume for Diamondrock Hospitality has been 2,282,600 shares per day over the past 30 days. Diamondrock Hospitality has a market cap of $2.4 billion and is part of the real estate industry. Shares are down 20.8% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Diamondrock Hospitality

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • DRH's revenue growth has slightly outpaced the industry average of 6.2%. Since the same quarter one year prior, revenues slightly increased by 8.2%. 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.
  • Net operating cash flow has increased to $65.54 million or 19.34% when compared to the same quarter last year. In addition, DIAMONDROCK HOSPITALITY CO has also vastly surpassed the industry average cash flow growth rate of -72.17%.
  • 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, DIAMONDROCK HOSPITALITY CO's return on equity is below that of both the industry average and the S&P 500.
  • DIAMONDROCK HOSPITALITY CO 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, DIAMONDROCK HOSPITALITY CO increased its bottom line by earning $0.82 versus $0.12 in the prior year. For the next year, the market is expecting a contraction of 47.0% in earnings ($0.44 versus $0.82).

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Cal-Maine Foods

Dividend Yield: 6.90%

Cal-Maine Foods

(NASDAQ:

CALM

) shares currently have a dividend yield of 6.90%.

Cal-Maine Foods, Inc. produces, grades, packages, markets, and distributes shell eggs. It offers specialty shell eggs, such as nutritionally enhanced, cage free, organic, and brown eggs under the Egg-Land's Best, Land O' Lake, Farmhouse, and 4-Grain brand names, as well as under private labels. The company has a P/E ratio of 10.04.

The average volume for Cal-Maine Foods has been 992,200 shares per day over the past 30 days. Cal-Maine Foods has a market cap of $2.5 billion and is part of the food & beverage industry. Shares are up 42.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Cal-Maine Foods

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and expanding profit margins. 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:

  • CALM's very impressive revenue growth greatly exceeded the industry average of 9.3%. Since the same quarter one year prior, revenues leaped by 70.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CALM's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CALM has a quick ratio of 2.17, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 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. Compared to other companies in the Food Products industry and the overall market, CAL-MAINE FOODS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 44.95% is the gross profit margin for CAL-MAINE FOODS INC which we consider to be strong. It has increased significantly from the same period last year. Along with this, the net profit margin of 23.45% is above that of the industry average.

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Ford Motor

Dividend Yield: 4.10%

Ford Motor

(NYSE:

F

) shares currently have a dividend yield of 4.10%.

Ford Motor Company manufactures and distributes automobiles worldwide. The company operates through two sectors, Automotive and Financial Services. The Automotive sector develops, manufactures, distributes, and services vehicles, parts, and accessories. The company has a P/E ratio of 12.34.

The average volume for Ford Motor has been 31,359,700 shares per day over the past 30 days. Ford Motor has a market cap of $57.7 billion and is part of the automotive industry. Shares are down 5.5% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Ford Motor

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, increase 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 generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 7.5%. Since the same quarter one year prior, revenues slightly increased by 9.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Automobiles industry. The net income increased by 128.6% when compared to the same quarter one year prior, rising from $835.00 million to $1,909.00 million.
  • Net operating cash flow has increased to $6,455.00 million or 20.22% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 8.45%.
  • FORD MOTOR CO reported significant earnings per share improvement 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, FORD MOTOR CO reported lower earnings of $0.78 versus $1.75 in the prior year. This year, the market expects an improvement in earnings ($1.63 versus $0.78).

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