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."

Liberty Property

Dividend Yield: 4.60%

Liberty Property (NYSE: LRY) shares currently have a dividend yield of 4.60%.

Liberty Property Trust is a publicly owned real estate investment holding trust. Through its subsidiary, it provides leasing, property management, development, acquisition, and other tenant-related services for a portfolio of industrial and office properties. The company has a P/E ratio of 39.19.

The average volume for Liberty Property has been 879,100 shares per day over the past 30 days. Liberty Property has a market cap of $5.0 billion and is part of the real estate industry. Shares are up 16.1% year to date as of the close of trading on Monday.

TheStreet Ratings rates Liberty Property as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, revenue growth, reasonable valuation levels and growth in earnings per share. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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 net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry average. The net income increased by 10.4% when compared to the same quarter one year prior, going from $34.79 million to $38.43 million.
  • LRY's revenue growth trails the industry average of 16.4%. Since the same quarter one year prior, revenues slightly increased by 4.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • LIBERTY PROPERTY TRUST'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, LIBERTY PROPERTY TRUST increased its bottom line by earning $1.05 versus $0.99 in the prior year. This year, the market expects an improvement in earnings ($1.10 versus $1.05).

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CreXus Investment

Dividend Yield: 7.70%

CreXus Investment (NYSE: CXS) shares currently have a dividend yield of 7.70%.

CreXus Investment Corp., together with its subsidiaries, operates as a commercial real estate company. The company has a P/E ratio of 15.33.

The average volume for CreXus Investment has been 1,135,600 shares per day over the past 30 days. CreXus Investment has a market cap of $998.5 million and is part of the real estate industry. Shares are up 6.4% year to date as of the close of trading on Monday.

TheStreet Ratings rates CreXus Investment as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations 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:
  • Compared to its closing price of one year ago, CXS's share price has jumped by 26.25%, 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, CXS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has significantly increased by 93.99% to $18.23 million when compared to the same quarter last year. In addition, CREXUS INVESTMENT CORP has also vastly surpassed the industry average cash flow growth rate of 38.55%.
  • The gross profit margin for CREXUS INVESTMENT CORP is currently very high, coming in at 74.50%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, CXS's net profit margin of 84.39% significantly outperformed against the industry.
  • CREXUS INVESTMENT CORP 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. 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, CREXUS INVESTMENT CORP reported lower earnings of $0.85 versus $1.59 in the prior year. This year, the market expects an improvement in earnings ($1.00 versus $0.85).
  • CXS, with its very weak revenue results, has greatly underperformed against the industry average of 16.5%. Since the same quarter one year prior, revenues plummeted by 54.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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Corrections Corporation of America

Dividend Yield: 5.20%

Corrections Corporation of America (NYSE: CXW) shares currently have a dividend yield of 5.20%.

Corrections Corporation of America, together with its subsidiaries, owns and operates privatized correctional and detention facilities in the United States. The company has a P/E ratio of 26.14.

The average volume for Corrections Corporation of America has been 1,816,200 shares per day over the past 30 days. Corrections Corporation of America has a market cap of $4.1 billion and is part of the diversified services industry. Shares are up 15% year to date as of the close of trading on Monday.

TheStreet Ratings rates Corrections Corporation of America as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 41.21% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CXW should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • CORRECTIONS CORP AMER has improved earnings per share by 7.1% in the most recent quarter compared to 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, CORRECTIONS CORP AMER increased its bottom line by earning $1.56 versus $1.55 in the prior year. This year, the market expects an improvement in earnings ($2.10 versus $1.56).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry average. The net income increased by 12.1% when compared to the same quarter one year prior, going from $40.52 million to $45.41 million.
  • CXW, with its decline in revenue, underperformed when compared the industry average of 16.5%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. 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.

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 19.25.

The average volume for Hawaiian Electric Industries has been 459,900 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 6.1% 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 13.1%. 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.

People's United Financial

Dividend Yield: 4.80%

People's United Financial (NASDAQ: PBCT) shares currently have a dividend yield of 4.80%.

People's United Financial, Inc. operates as the bank holding company for People's United Bank that provides commercial banking, retail and business banking, and wealth management services to individual, corporate, and municipal customers. The company has a P/E ratio of 18.47.

The average volume for People's United Financial has been 3,297,100 shares per day over the past 30 days. People's United Financial has a market cap of $4.5 billion and is part of the banking industry. Shares are up 10% year to date as of the close of trading on Monday.

TheStreet Ratings rates People's United Financial as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, attractive valuation levels, expanding profit margins, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • PEOPLE'S UNITED FINL 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. We feel that this trend should continue. During the past fiscal year, PEOPLE'S UNITED FINL INC increased its bottom line by earning $0.72 versus $0.57 in the prior year. This year, the market expects an improvement in earnings ($0.80 versus $0.72).
  • The gross profit margin for PEOPLE'S UNITED FINL INC is currently very high, coming in at 88.40%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.19% is above that of the industry average.
  • Net operating cash flow has increased to $82.70 million or 43.57% when compared to the same quarter last year. In addition, PEOPLE'S UNITED FINL INC has also vastly surpassed the industry average cash flow growth rate of -173.46%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 2.6%. Since the same quarter one year prior, revenues slightly dropped by 2.3%. 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.

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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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