Buy-Rated Dividend Stocks In The Top 3: EDR, LHO, VZ

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."

Education Realty

Dividend Yield: 4.20%

Education Realty

(NYSE:

EDR

) shares currently have a dividend yield of 4.20%.

EdR is a real estate investment trust. The firm invests in the real estate markets of United States. It invests collegiate housing communities. The firm develops, acquires, owns, and manages collegiate housing communities located near university campuses. The company has a P/E ratio of 57.52.

The average volume for Education Realty has been 511,000 shares per day over the past 30 days. Education Realty has a market cap of $1.7 billion and is part of the real estate industry. Shares are down 3.9% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Education Realty

as a

buy

. Among the primary strengths of the company is its 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:

  • EDR, with its decline in revenue, underperformed when compared the industry average of 6.0%. Since the same quarter one year prior, revenues slightly dropped by 9.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • EDUCATION REALTY TRUST INC 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, EDUCATION REALTY TRUST INC increased its bottom line by earning $0.98 versus $0.15 in the prior year. For the next year, the market is expecting a contraction of 66.3% in earnings ($0.33 versus $0.98).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 122.1% when compared to the same quarter one year ago, falling from $21.40 million to -$4.72 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, EDUCATION REALTY TRUST INC's return on equity significantly trails that of both the industry average and the S&P 500.

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LaSalle Hotel Properties

Dividend Yield: 6.00%

LaSalle Hotel Properties

(NYSE:

LHO

) shares currently have a dividend yield of 6.00%.

LaSalle Hotel Properties, a real estate investment trust (REIT), engages in the purchase, ownership, redevelopment, and leasing of primarily upscale and luxury full-service hotels in convention, resort, and urban business markets in the United States. The company has a P/E ratio of 27.58.

The average volume for LaSalle Hotel Properties has been 1,643,400 shares per day over the past 30 days. LaSalle Hotel Properties has a market cap of $3.4 billion and is part of the real estate industry. Shares are down 26.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

LaSalle Hotel Properties

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 expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • LHO's revenue growth has slightly outpaced the industry average of 6.0%. Since the same quarter one year prior, revenues slightly increased by 7.5%. 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 slightly increased to $101.99 million or 7.92% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -24.80%.
  • 43.69% is the gross profit margin for LASALLE HOTEL PROPERTIES which we consider to be strong. Regardless of LHO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LHO's net profit margin of 14.34% is significantly lower than the industry average.
  • LASALLE HOTEL PROPERTIES 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, LASALLE HOTEL PROPERTIES increased its bottom line by earning $1.88 versus $0.73 in the prior year. For the next year, the market is expecting a contraction of 40.1% in earnings ($1.13 versus $1.88).

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Verizon Communications

Dividend Yield: 5.00%

Verizon Communications

(NYSE:

VZ

) shares currently have a dividend yield of 5.00%.

Verizon Communications Inc., through its subsidiaries, provides communications, information, and entertainment products and services to consumers, businesses, and governmental agencies worldwide. The company has a P/E ratio of 18.48.

The average volume for Verizon Communications has been 15,327,300 shares per day over the past 30 days. Verizon Communications has a market cap of $183.5 billion and is part of the telecommunications industry. Shares are down 3.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Verizon Communications

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, growth in earnings per share 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:

  • VZ's revenue growth has slightly outpaced the industry average of 2.6%. Since the same quarter one year prior, revenues slightly increased by 5.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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 Diversified Telecommunication Services industry average. The net income increased by 9.3% when compared to the same quarter one year prior, going from $3,695.00 million to $4,038.00 million.
  • Net operating cash flow has increased to $9,520.00 million or 13.97% when compared to the same quarter last year. In addition, VERIZON COMMUNICATIONS INC has also modestly surpassed the industry average cash flow growth rate of 7.84%.
  • VERIZON COMMUNICATIONS INC has improved earnings per share by 11.2% 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, VERIZON COMMUNICATIONS INC reported lower earnings of $2.51 versus $4.00 in the prior year. This year, the market expects an improvement in earnings ($3.96 versus $2.51).
  • The gross profit margin for VERIZON COMMUNICATIONS INC is rather high; currently it is at 59.87%. Regardless of VZ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VZ's net profit margin of 12.17% compares favorably to the industry average.

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