3 Buy-Rated Dividend Stocks: CCG, EPR, LXP

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

Campus Crest Communities

Dividend Yield: 5.00%

Campus Crest Communities (NYSE: CCG) shares currently have a dividend yield of 5.00%.

Campus Crest Communities, Inc., a real estate investment trust (REIT), engages in the ownership, development, building, and management of student housing properties under the Grove brand name in the United States. The company has a P/E ratio of 50.54.

The average volume for Campus Crest Communities has been 863,700 shares per day over the past 30 days. Campus Crest Communities has a market cap of $848.2 million and is part of the real estate industry. Shares are up 9.1% year to date as of the close of trading on Friday.

TheStreet Ratings rates Campus Crest 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, revenue growth, reasonable valuation levels and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • CAMPUS CREST COMMUNITIES 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, CAMPUS CREST COMMUNITIES INC increased its bottom line by earning $0.16 versus $0.11 in the prior year. This year, the market expects an improvement in earnings ($0.29 versus $0.16).
  • 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 322.0% when compared to the same quarter one year prior, rising from -$0.97 million to $2.16 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.0%. Since the same quarter one year prior, revenues slightly increased by 8.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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.

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EPR Properties

Dividend Yield: 5.30%

EPR Properties (NYSE: EPR) shares currently have a dividend yield of 5.30%.

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 24.18.

The average volume for EPR Properties has been 298,900 shares per day over the past 30 days. EPR Properties has a market cap of $2.8 billion and is part of the real estate industry. Shares are up 31.3% year to date as of the close of trading on Friday.

TheStreet Ratings rates EPR Properties 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, revenue growth and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 48.00% and other important driving factors, this stock has surged by 38.31% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, EPR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • EPR PROPERTIES has improved earnings per share by 48.0% 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, EPR PROPERTIES increased its bottom line by earning $2.31 versus $1.62 in the prior year. This year, the market expects an improvement in earnings ($2.80 versus $2.31).
  • 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 92.8% when compared to the same quarter one year prior, rising from $21.37 million to $41.21 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.0%. Since the same quarter one year prior, revenues slightly increased by 8.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for EPR PROPERTIES is rather high; currently it is at 67.00%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 49.22% significantly outperformed against 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.

Lexington Realty

Dividend Yield: 4.50%

Lexington Realty (NYSE: LXP) shares currently have a dividend yield of 4.50%.

Lexington Corporate Properties Trust operates as a self-managed and self-administered real estate investment trust (REIT). The company acquires, owns, and manages a portfolio of office, industrial, and retail properties net-leased to corporate tenants in the United States. The company has a P/E ratio of 15.93.

The average volume for Lexington Realty has been 2,194,900 shares per day over the past 30 days. Lexington Realty has a market cap of $2.9 billion and is part of the real estate industry. Shares are up 28% year to date as of the close of trading on Friday.

TheStreet Ratings rates Lexington Realty 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 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:
  • LXP's revenue growth has slightly outpaced the industry average of 12.0%. Since the same quarter one year prior, revenues rose by 13.5%. 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.
  • This stock has managed to rise its share value by 55.04% over the past twelve months. Regarding the stock's future course, although almost any stock can fall in a broad market decline, LXP 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 increased to $57.13 million or 30.44% when compared to the same quarter last year. In addition, LEXINGTON REALTY TRUST has also vastly surpassed the industry average cash flow growth rate of -20.78%.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, LEXINGTON REALTY TRUST has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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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