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."

Health Care REIT

Dividend Yield: 4.30%

Health Care REIT (NYSE: HCN) shares currently have a dividend yield of 4.30%.

Health Care REIT, Inc. is an independent equity real estate investment trust. The firm engages in acquiring, planning, developing, managing, repositioning and monetizing of real estate assets. It primarily invests in the real estate markets of the United States. The company has a P/E ratio of 72.00.

The average volume for Health Care REIT has been 1,814,400 shares per day over the past 30 days. Health Care REIT has a market cap of $18.4 billion and is part of the real estate industry. Shares are up 16.3% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Health Care REIT as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 29.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HEALTH CARE REIT INC has improved earnings per share by 46.1% 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, HEALTH CARE REIT INC increased its bottom line by earning $0.47 versus $0.34 in the prior year. This year, the market expects an improvement in earnings ($1.17 versus $0.47).
  • 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 140.8% when compared to the same quarter one year prior, rising from $44.52 million to $107.18 million.
  • Net operating cash flow has increased to $254.66 million or 49.28% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 38.81%.
  • Powered by its strong earnings growth of 46.15% and other important driving factors, this stock has surged by 30.64% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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.

Textainer Group Holdings

Dividend Yield: 4.40%

Textainer Group Holdings (NYSE: TGH) shares currently have a dividend yield of 4.40%.

Textainer Group Holdings Limited, through its subsidiaries, engages in the purchase, ownership, management, leasing, and resale of a fleet of marine cargo containers worldwide. The company operates in three segments: Container Ownership, Container Management, and Container Resale. The company has a P/E ratio of 10.33.

The average volume for Textainer Group Holdings has been 293,200 shares per day over the past 30 days. Textainer Group Holdings has a market cap of $2.3 billion and is part of the diversified services industry. Shares are up 32.5% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Textainer Group Holdings as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations, increase in net income and solid stock price performance. 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:
  • TGH's revenue growth has slightly outpaced the industry average of 7.2%. Since the same quarter one year prior, revenues slightly increased by 9.4%. 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 net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Trading Companies & Distributors industry average. The net income increased by 10.3% when compared to the same quarter one year prior, going from $54.92 million to $60.57 million.
  • The gross profit margin for TEXTAINER GROUP HOLDINGS LTD is currently very high, coming in at 86.70%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 47.58% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $79.42 million or 46.13% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 27.69%.
  • TEXTAINER GROUP HOLDINGS LTD' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, TEXTAINER GROUP HOLDINGS LTD increased its bottom line by earning $3.96 versus $3.80 in the prior year. This year, the market expects an improvement in earnings ($4.01 versus $3.96).

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.

Pepco Holdings

Dividend Yield: 5.00%

Pepco Holdings (NYSE: POM) shares currently have a dividend yield of 5.00%.

Pepco Holdings, Inc., through its subsidiaries, engages in the transmission, distribution, and supply of electricity. The company also distributes and supplies natural gas. The company has a P/E ratio of 17.59.

The average volume for Pepco Holdings has been 1,847,700 shares per day over the past 30 days. Pepco Holdings has a market cap of $5.4 billion and is part of the utilities industry. Shares are up 12.6% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Pepco Holdings as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, good cash flow from operations, growth in earnings per share and notable return on equity. 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. 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.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 126.3% when compared to the same quarter one year prior, rising from $19.00 million to $43.00 million.
  • Net operating cash flow has increased to $173.00 million or 11.61% when compared to the same quarter last year. In addition, PEPCO HOLDINGS INC has also modestly surpassed the industry average cash flow growth rate of 5.09%.
  • PEPCO HOLDINGS INC 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, PEPCO HOLDINGS INC increased its bottom line by earning $1.24 versus $1.14 in the prior year. For the next year, the market is expecting a contraction of 8.1% in earnings ($1.14 versus $1.24).
  • POM, 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 9.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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.

EPR Properties

Dividend Yield: 5.90%

EPR Properties (NYSE: EPR) shares currently have a dividend yield of 5.90%.

EPR Properties, a real estate investment trust (REIT), develops, owns, leases, and finances entertainment and related properties in the United States and Canada. Its properties include megaplex theatres, entertainment retail centers, and destination recreational and specialty properties. The company has a P/E ratio of 23.85.

The average volume for EPR Properties has been 305,600 shares per day over the past 30 days. EPR Properties has a market cap of $2.5 billion and is part of the real estate industry. Shares are up 16.6% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates EPR 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, solid stock price performance and expanding profit margins. 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 7.8%. 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 $61.85 million or 2.49% when compared to the same quarter last year. Despite an increase in cash flow, EPR PROPERTIES's cash flow growth rate is still lower than the industry average growth rate of 38.81%.
  • 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.
  • EPR PROPERTIES's earnings per share declined by 33.8% 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, EPR PROPERTIES increased its bottom line by earning $2.24 versus $1.62 in the prior year. This year, the market expects an improvement in earnings ($2.72 versus $2.24).

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.

CA

Dividend Yield: 4.10%

CA (NASDAQ: CA) shares currently have a dividend yield of 4.10%.

CA Technologies, together with its subsidiaries, provides enterprise information technology (IT) management software and solutions in the United States and internationally. The company operates in three segments: Mainframe Solutions, Enterprise Solutions, and Services. The company has a P/E ratio of 12.52.

The average volume for CA has been 3,638,500 shares per day over the past 30 days. CA has a market cap of $11.2 billion and is part of the computer software & services industry. Shares are up 12.2% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates CA as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, attractive valuation levels, good cash flow from operations, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

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 Software industry and the overall market, CA INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $566.00 million or 44.38% when compared to the same quarter last year. In addition, CA INC has also vastly surpassed the industry average cash flow growth rate of -16.00%.
  • CA INC's earnings per share improvement from the most recent quarter was slightly positive. 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, CA INC increased its bottom line by earning $1.91 versus $1.61 in the prior year. This year, the market expects an improvement in earnings ($2.42 versus $1.91).
  • CA's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 1.00 is somewhat weak and could be cause for future problems.

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.

null

More from Markets

AMD Rises Above the Competition; Loan Losses Mount for Big Banks -- ICYMI

AMD Rises Above the Competition; Loan Losses Mount for Big Banks -- ICYMI

McKesson Internal Review Clears Senior Management of Wrongdoing on Opioids

McKesson Internal Review Clears Senior Management of Wrongdoing on Opioids

Starbucks Surprises Wall Street With U.S. Sales Up a Paltry 2%

Starbucks Surprises Wall Street With U.S. Sales Up a Paltry 2%

Dow Jumps 238 Points as S&P 500, Nasdaq Also Climb

Dow Jumps 238 Points as S&P 500, Nasdaq Also Climb

Why Nashville, Denver, LA Should Reconsider Bids for Amazon HQ2

Why Nashville, Denver, LA Should Reconsider Bids for Amazon HQ2