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."

Mid-America Apartment Communities

Dividend Yield: 4.10%

Mid-America Apartment Communities (NYSE: MAA) shares currently have a dividend yield of 4.10%.

Mid-America Apartment Communities, Inc. is an independent real estate investment trust. The firm invests in the real estate markets of the United States. It is engaged in acquisition, redevelopment, new development, property management, and disposition of multifamily apartment communities. The company has a P/E ratio of 39.98.

The average volume for Mid-America Apartment Communities has been 334,900 shares per day over the past 30 days. Mid-America Apartment Communities has a market cap of $2.9 billion and is part of the real estate industry. Shares are up 6.3% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Mid-America Apartment Communities as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, robust revenue growth, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • MID-AMERICA APT CMNTYS 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, MID-AMERICA APT CMNTYS INC increased its bottom line by earning $1.56 versus $0.88 in the prior year. This year, the market expects an improvement in earnings ($1.69 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 18.9% when compared to the same quarter one year prior, going from $18.76 million to $22.31 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 16.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $53.23 million or 22.87% when compared to the same quarter last year. Despite an increase in cash flow, MID-AMERICA APT CMNTYS INC's cash flow growth rate is still lower than the industry average growth rate of 36.21%.
  • 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, MID-AMERICA APT CMNTYS INC's return on equity is below that of both the industry average and the S&P 500.

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Plains All American Pipeline

Dividend Yield: 4.10%

Plains All American Pipeline (NYSE: PAA) shares currently have a dividend yield of 4.10%.

Plains All American Pipeline, L.P., through its subsidiaries, engages in the transportation, storage, terminalling, and marketing of crude oil and refined products in the United States and Canada. The company operates in three segments: Transportation, Facilities, and Supply and Logistics. The company has a P/E ratio of 23.46.

The average volume for Plains All American Pipeline has been 910,200 shares per day over the past 30 days. Plains All American Pipeline has a market cap of $18.9 billion and is part of the energy industry. Shares are up 25.2% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Plains All American Pipeline as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, solid stock price performance and growth in earnings per share. 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:
  • PAA's revenue growth has slightly outpaced the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 6.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry average. The net income increased by 15.1% when compared to the same quarter one year prior, going from $278.00 million to $320.00 million.
  • 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 42.75% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • PLAINS ALL AMER PIPELNE -LP reported flat earnings per share in the most recent 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, PLAINS ALL AMER PIPELNE -LP reported lower earnings of $2.40 versus $2.44 in the prior year. This year, the market expects an improvement in earnings ($2.94 versus $2.40).
  • The gross profit margin for PLAINS ALL AMER PIPELNE -LP is currently extremely low, coming in at 6.40%. Regardless of PAA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.39% trails the industry average.

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Government Properties Income

Dividend Yield: 6.70%

Government Properties Income (NYSE: GOV) shares currently have a dividend yield of 6.70%.

Government Properties Income Trust operates as a real estate investment trust (REIT) in the United States. It primarily owns and leases office buildings that are leased mainly to government tenants. The company has a P/E ratio of 24.44.

The average volume for Government Properties Income has been 850,100 shares per day over the past 30 days. Government Properties Income has a market cap of $1.4 billion and is part of the real estate industry. Shares are up 8.5% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Government Properties Income 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 increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

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 8.8%. 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 increased to $17.85 million or 47.12% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 36.21%.
  • 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.
  • GOVERNMENT PPTYS INCOME TR's earnings per share declined by 10.7% 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, GOVERNMENT PPTYS INCOME TR reported lower earnings of $1.03 versus $1.06 in the prior year. This year, the market expects an improvement in earnings ($1.06 versus $1.03).

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.

Seagate Technology

Dividend Yield: 4.10%

Seagate Technology (NASDAQ: STX) shares currently have a dividend yield of 4.10%.

Seagate Technology Public Limited Company designs, manufactures, markets, and sells hard disk drives for enterprise storage, client compute, and client non-compute market applications worldwide. The company has a P/E ratio of 5.75.

The average volume for Seagate Technology has been 5,279,600 shares per day over the past 30 days. Seagate Technology has a market cap of $13.3 billion and is part of the computer hardware industry. Shares are up 21.4% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Seagate Technology as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, notable return on equity, good cash flow from operations 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:
  • STX's revenue growth has slightly outpaced the industry average of 10.4%. Since the same quarter one year prior, revenues rose by 14.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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 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 Computers & Peripherals industry and the overall market, SEAGATE TECHNOLOGY PLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $844.00 million or 17.38% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -11.05%.
  • SEAGATE TECHNOLOGY PLC'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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, SEAGATE TECHNOLOGY PLC increased its bottom line by earning $6.45 versus $1.10 in the prior year. For the next year, the market is expecting a contraction of 20.0% in earnings ($5.16 versus $6.45).

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Total

Dividend Yield: 5.50%

Total (NYSE: TOT) shares currently have a dividend yield of 5.50%.

TOTAL S.A., together with its subsidiaries, operates as a oil and gas company worldwide. The company operates in three segments: Upstream, Refining and Chemicals, and Marketing and Services. The company has a P/E ratio of 7.16.

The average volume for Total has been 1,830,200 shares per day over the past 30 days. Total has a market cap of $112.3 billion and is part of the energy industry. Shares are down 4.8% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Total as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, good cash flow from operations, increase in net income 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 revenue growth greatly exceeded the industry average of 0.7%. Since the same quarter one year prior, revenues rose by 29.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 36.8% when compared to the same quarter one year prior, rising from $2,495.48 million to $3,413.92 million.
  • Net operating cash flow has significantly increased by 192.85% to $8,281.29 million when compared to the same quarter last year. In addition, TOTAL SA has also vastly surpassed the industry average cash flow growth rate of 0.00%.
  • TOTAL SA has improved earnings per share by 35.5% 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, TOTAL SA reported lower earnings of $6.22 versus $7.05 in the prior year. This year, the market expects an improvement in earnings ($6.73 versus $6.22).

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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