Buy-Rated Dividend Stocks In The Top 3: LHO, EPR, GSK

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."

LaSalle Hotel Properties

Dividend Yield: 6.40%

LaSalle Hotel Properties

(NYSE:

LHO

) shares currently have a dividend yield of 6.40%.

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 25.87.

The average volume for LaSalle Hotel Properties has been 1,599,300 shares per day over the past 30 days. LaSalle Hotel Properties has a market cap of $3.2 billion and is part of the real estate industry. Shares are down 30.3% 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 6.1%. 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. Despite an increase in cash flow, LASALLE HOTEL PROPERTIES's average is still marginally south of the industry average growth rate of 9.44%.
  • 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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EPR Properties

Dividend Yield: 6.50%

EPR Properties

(NYSE:

EPR

) shares currently have a dividend yield of 6.50%.

EPR Properties is a real estate investment trust. It invests in the real estate markets of United States and Canada. The firm develops, owns, leases and finances properties in select market segments primarily related to entertainment, education and recreation. The company has a P/E ratio of 18.96.

The average volume for EPR Properties has been 315,500 shares per day over the past 30 days. EPR Properties has a market cap of $3.4 billion and is part of the real estate industry. Shares are down 2.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

EPR Properties

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, expanding profit margins and increase in stock price during the past year. 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:

  • EPR's revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 9.7%. 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 Real Estate Investment Trusts (REITs) industry average. The net income increased by 17.5% when compared to the same quarter one year prior, going from $42.71 million to $50.20 million.
  • Net operating cash flow has increased to $64.42 million or 19.61% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 9.44%.
  • The gross profit margin for EPR PROPERTIES is currently very high, coming in at 73.12%. Regardless of EPR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EPR's net profit margin of 46.18% significantly outperformed against the industry.
  • After a year of stock price fluctuations, the net result is that EPR's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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.

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GlaxoSmithKline

Dividend Yield: 5.70%

GlaxoSmithKline

(NYSE:

GSK

) shares currently have a dividend yield of 5.70%.

GlaxoSmithKline plc creates, discovers, develops, manufactures, and markets pharmaceutical products, including vaccines, over-the-counter medicines, and health-related consumer products worldwide. The company has a P/E ratio of 13.99.

The average volume for GlaxoSmithKline has been 3,828,500 shares per day over the past 30 days. GlaxoSmithKline has a market cap of $98.4 billion and is part of the drugs industry. Shares are down 4.8% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

GlaxoSmithKline

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity 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:

  • GSK's revenue growth has slightly outpaced the industry average of 3.7%. Since the same quarter one year prior, revenues slightly increased by 2.7%. 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 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 Pharmaceuticals industry and the overall market, GLAXOSMITHKLINE PLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for GLAXOSMITHKLINE PLC is rather high; currently it is at 62.96%. Regardless of GSK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GSK's net profit margin of 3.93% is significantly lower than the industry average.
  • GLAXOSMITHKLINE PLC's earnings per share declined by 38.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, GLAXOSMITHKLINE PLC reported lower earnings of $1.77 versus $3.68 in the prior year. This year, the market expects an improvement in earnings ($78.52 versus $1.77).
  • The share price of GLAXOSMITHKLINE PLC has not done very well: it is down 10.95% 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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