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."

BCE

Dividend Yield: 4.90%

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

BCE Inc. provides communications solutions to residential, business, and wholesale customers primarily in Canada. The company has a P/E ratio of 13.47. Currently there are 3 analysts that rate BCE a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for BCE has been 899,500 shares per day over the past 30 days. BCE has a market cap of $35.7 billion and is part of the telecommunications industry. Shares are up 5.8% year to date as of the close of trading on Friday.

TheStreet Ratings rates BCE as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and expanding profit margins. We feel these 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:
  • 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.
  • BCE INC has improved earnings per share by 46.8% 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. During the past fiscal year, BCE INC increased its bottom line by earning $3.39 versus $2.87 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 44.9% when compared to the same quarter one year prior, rising from $512.00 million to $742.00 million.
  • 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. In comparison to the other companies in the Diversified Telecommunication Services industry and the overall market, BCE INC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • 47.10% is the gross profit margin for BCE INC which we consider to be strong. It has increased from the same quarter the previous year.

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DineEquity

Dividend Yield: 4.20%

DineEquity (NYSE: DIN) shares currently have a dividend yield of 4.20%.

DineEquity, Inc., through its subsidiaries, develops, franchises, and operates full-service restaurant chains in the United States and internationally. The company has a P/E ratio of 10.66. Currently there are 2 analysts that rate DineEquity a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for DineEquity has been 170,700 shares per day over the past 30 days. DineEquity has a market cap of $1.4 billion and is part of the leisure industry. Shares are up 5.1% year to date as of the close of trading on Friday.

TheStreet Ratings rates DineEquity as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, reasonable valuation levels, 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:
  • Compared to its closing price of one year ago, DIN's share price has jumped by 46.20%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DIN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The gross profit margin for DINEEQUITY INC is rather high; currently it is at 59.50%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 11.86% trails the industry average.
  • The revenue fell significantly faster than the industry average of 2.7%. Since the same quarter one year prior, revenues fell by 34.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, DINEEQUITY INC's return on equity significantly exceeds that of both the industry average and the S&P 500.

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TECO Energy

Dividend Yield: 4.90%

TECO Energy (NYSE: TE) shares currently have a dividend yield of 4.90%.

TECO Energy, Inc., an electric and gas utility holding company, engages in the regulated electric and gas utility operations. The company has a P/E ratio of 15.83. Currently there are no analysts that rate TECO Energy a buy, 1 analyst rates it a sell, and 10 rate it a hold.

The average volume for TECO Energy has been 1,832,600 shares per day over the past 30 days. TECO Energy has a market cap of $3.9 billion and is part of the utilities industry. Shares are up 8.4% year to date as of the close of trading on Friday.

TheStreet Ratings rates TECO Energy as a buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures 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:
  • Net operating cash flow has significantly increased by 80.72% to $149.10 million when compared to the same quarter last year. In addition, TECO ENERGY INC has also vastly surpassed the industry average cash flow growth rate of 12.31%.
  • TE, with its decline in revenue, slightly underperformed the industry average of 3.4%. Since the same quarter one year prior, revenues slightly dropped by 4.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Even though the current debt-to-equity ratio is 1.30, it is still below the industry average, suggesting that this level of debt is acceptable within the Multi-Utilities industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.72 is weak.
  • In its most recent trading session, TE has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.

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.

Hospitality Properties

Dividend Yield: 6.90%

Hospitality Properties (NYSE: HPT) shares currently have a dividend yield of 6.90%.

Hospitality Properties Trust, a real estate investment trust (REIT), engages in buying, owning, and leasing hotels. The company has a P/E ratio of 32.57. Currently there is 1 analyst that rates Hospitality Properties a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Hospitality Properties has been 1,339,600 shares per day over the past 30 days. Hospitality Properties has a market cap of $3.4 billion and is part of the real estate industry. Shares are up 16.1% year to date as of the close of trading on Friday.

TheStreet Ratings rates Hospitality Properties as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and increase in stock price during the past year. 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 9.0%. 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.
  • HOSPITALITY PROPERTIES TRUST's earnings per share declined by 40.0% 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 year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, HOSPITALITY PROPERTIES TRUST reported lower earnings of $0.84 versus $1.30 in the prior year. This year, the market expects an improvement in earnings ($0.87 versus $0.84).
  • In its most recent trading session, HPT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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 HOSPITALITY PROPERTIES TRUST is rather low; currently it is at 20.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 8.25% significantly trails 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.

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 19.33. 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 444,100 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 8.9% year to date as of the close of trading on Friday.

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 13.1%. 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.

Other helpful dividend tools from TheStreet:

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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