5 Buy-Rated Dividend Stocks

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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 and 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 5 stocks with substantial yields, that ultimately, we have rated "Buy."

Healthcare Realty

Dividend Yield: 4.30%

Healthcare Realty (NYSE: HR) shares currently have a dividend yield of 4.30%.

Healthcare Realty Trust Incorporated is an independent real estate investment trust. The firm invests in real estate markets of the United States. The company has a P/E ratio of 278.50. Currently there are 3 analysts that rate Healthcare Realty a buy, 1 analyst rates it a sell, and 9 rate it a hold.

The average volume for Healthcare Realty has been 497,800 shares per day over the past 30 days. Healthcare Realty has a market cap of $2.5 billion and is part of the real estate industry. Shares are up 16% year to date as of the close of trading on Monday.

TheStreet Ratings rates Healthcare Realty as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, solid stock price performance and notable return on equity. We feel these 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 16.4%. 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.
  • HEALTHCARE REALTY TRUST INC has exprienced 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HEALTHCARE REALTY TRUST INC turned its bottom line around by earning $0.10 versus -$0.04 in the prior year. This year, the market expects an improvement in earnings ($0.23 versus $0.10).
  • Net operating cash flow has increased to $44.13 million or 16.77% when compared to the same quarter last year. Despite an increase in cash flow, HEALTHCARE REALTY TRUST INC's cash flow growth rate is still lower than the industry average growth rate of 38.95%.
  • 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, despite 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.
  • 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, HEALTHCARE REALTY TRUST INC underperformed against that of the industry average and is significantly less than that of the S&P 500.

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Medical Properties

Dividend Yield: 5.10%

Medical Properties (NYSE: MPW) shares currently have a dividend yield of 5.10%.

Medical Properties Trust, Inc. operates as a real estate investment trust (REIT) in the United States. It acquires, develops, and invests in healthcare facilities; and leases healthcare facilities to healthcare operating companies and healthcare providers. The company has a P/E ratio of 27.86. Currently there are 2 analysts that rate Medical Properties a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Medical Properties has been 1,687,400 shares per day over the past 30 days. Medical Properties has a market cap of $2.1 billion and is part of the real estate industry. Shares are up 31.7% year to date as of the close of trading on Monday.

TheStreet Ratings rates Medical Properties as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • MPW's very impressive revenue growth greatly exceeded the industry average of 16.4%. Since the same quarter one year prior, revenues leaped by 66.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 260.00% and other important driving factors, this stock has surged by 63.66% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • MEDICAL PROPERTIES TRUST 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 two years. We feel that this trend should continue. During the past fiscal year, MEDICAL PROPERTIES TRUST increased its bottom line by earning $0.57 versus $0.13 in the prior year. This year, the market expects an improvement in earnings ($0.84 versus $0.57).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 125.0% when compared to the same quarter one year prior, rising from $12.69 million to $28.56 million.
  • The gross profit margin for MEDICAL PROPERTIES TRUST is rather high; currently it is at 69.40%. It has increased significantly from the same period last year. Along with this, the net profit margin of 51.22% significantly outperformed against the industry average.

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Garmin

Dividend Yield: 5.40%

Garmin (NASDAQ: GRMN) shares currently have a dividend yield of 5.40%.

Garmin Ltd., together with its subsidiaries, designs, develops, manufactures, and markets global positioning system (GPS) enabled products and other navigation, communication, and information products for the automotive/mobile, outdoor, fitness, marine, and general aviation markets worldwide. The company has a P/E ratio of 12.05. Currently there are 4 analysts that rate Garmin a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Garmin has been 1,434,100 shares per day over the past 30 days. Garmin has a market cap of $6.5 billion and is part of the electronics industry. Shares are down 17.9% year to date as of the close of trading on Monday.

TheStreet Ratings rates Garmin as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • GRMN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, GRMN has a quick ratio of 2.19, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for GARMIN LTD is rather high; currently it is at 50.30%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 16.82% significantly outperformed against the industry average.
  • Despite the weak revenue results, GRMN has outperformed against the industry average of 28.6%. Since the same quarter one year prior, revenues fell by 15.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 Household Durables industry and the overall market, GARMIN LTD's return on equity exceeds that of both the industry average and the S&P 500.
  • GARMIN LTD's earnings per share declined by 22.4% in the most recent quarter compared to 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, GARMIN LTD increased its bottom line by earning $2.77 versus $2.67 in the prior year. For the next year, the market is expecting a contraction of 13.7% in earnings ($2.39 versus $2.77).

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Hawaiian Electric Industries

Dividend Yield: 4.50%

Hawaiian Electric Industries (NYSE: HE) shares currently have a dividend yield of 4.50%.

Hawaiian Electric Industries, Inc., through its subsidiaries, primarily engages in electric utility and banking businesses primarily in Hawaii. It operates in two segments, Electric Utility and Bank. The company has a P/E ratio of 19.22. Currently there are no analysts that rate Hawaiian Electric Industries a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Hawaiian Electric Industries has been 439,400 shares per day over the past 30 days. Hawaiian Electric Industries has a market cap of $2.7 billion and is part of the utilities industry. Shares are up 8.2% year to date as of the close of trading on Monday.

TheStreet Ratings rates Hawaiian Electric Industries as a buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • 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. 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.
  • HAWAIIAN ELECTRIC INDS has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, HAWAIIAN ELECTRIC INDS reported lower earnings of $1.43 versus $1.44 in the prior year. This year, the market expects an improvement in earnings ($1.65 versus $1.43).
  • HE, with its decline in revenue, underperformed when compared the industry average of 13.2%. Since the same quarter one year prior, revenues slightly dropped by 1.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Even though the current debt-to-equity ratio is 1.05, it is still below the industry average, suggesting that this level of debt is acceptable within the Electric Utilities industry.

New From TheStreet: Jim Cramer's Protégé, Dave Peltier, only buys dividend stocks that have the potential for a 3% to 4% yield and 10% growth. Get his best picks for less than $50/year.

PPL

Dividend Yield: 4.90%

PPL (NYSE: PPL) shares currently have a dividend yield of 4.90%.

PPL Corporation, an energy and utility holding company, engages in the generation, transmission, distribution, and sale of electricity to wholesale and retail customers in the United States and the United Kingdom. The company operates in four segments: Kentucky Regulated, U.K. The company has a P/E ratio of 11.53. Currently there are 3 analysts that rate PPL a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for PPL has been 3,954,500 shares per day over the past 30 days. PPL has a market cap of $17.5 billion and is part of the utilities industry. Shares are up 5.2% year to date as of the close of trading on Monday.

TheStreet Ratings rates PPL as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • 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. Compared to other companies in the Electric Utilities industry and the overall market, PPL CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has slightly increased to $670.00 million or 1.36% when compared to the same quarter last year. Despite an increase in cash flow, PPL CORP's average is still marginally south of the industry average growth rate of 5.26%.
  • 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. 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 revenue fell significantly faster than the industry average of 13.2%. Since the same quarter one year prior, revenues fell by 25.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for PPL CORP is currently lower than what is desirable, coming in at 32.50%. Regardless of PPL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, PPL's net profit margin of 11.48% compares favorably to the industry average.

New From TheStreet: Jim Cramer's Protégé, Dave Peltier, only buys dividend stocks that have the potential for a 3% to 4% yield and 10% growth. Get his best picks for less than $50/year.

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Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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