4 Buy-Rated Dividend Stocks: HCP, EEP, TCP, HPT

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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

HCP

Dividend Yield: 4.90%

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

HCP, Inc. is an independent hybrid real estate investment trust. The fund invests in real estate markets of the United States. The company has a P/E ratio of 22.53.

The average volume for HCP has been 3,206,600 shares per day over the past 30 days. HCP has a market cap of $19.5 billion and is part of the real estate industry. Shares are down 4.8% year to date as of the close of trading on Monday.

TheStreet Ratings rates HCP as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins, increase in net income 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:
  • HCP's revenue growth has slightly outpaced the industry average of 7.0%. Since the same quarter one year prior, revenues rose by 11.7%. 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 $357.25 million or 20.25% when compared to the same quarter last year. In addition, HCP INC has also vastly surpassed the industry average cash flow growth rate of -81.00%.
  • HCP INC' 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, HCP INC increased its bottom line by earning $1.82 versus $1.27 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus $1.82).
  • The gross profit margin for HCP INC is rather high; currently it is at 60.60%. Regardless of HCP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HCP's net profit margin of 40.12% significantly outperformed against the industry.
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income increased by 5.6% when compared to the same quarter one year prior, going from $202.02 million to $213.40 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Enbridge Energy Partners

Dividend Yield: 7.00%

Enbridge Energy Partners (NYSE: EEP) shares currently have a dividend yield of 7.00%.

Enbridge Energy Partners, L.P. owns and operates crude oil and liquid petroleum transportation and storage assets; and natural gas gathering, treating, processing, transportation, and marketing assets in the United States. The company has a P/E ratio of 23.95.

The average volume for Enbridge Energy Partners has been 938,200 shares per day over the past 30 days. Enbridge Energy Partners has a market cap of $7.9 billion and is part of the energy industry. Shares are up 9% year to date as of the close of trading on Monday.

TheStreet Ratings rates Enbridge Energy Partners as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, 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 weak growth in earnings per share.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.2%. 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 significantly increased by 174.34% to $271.60 million when compared to the same quarter last year. In addition, ENBRIDGE ENERGY PRTNRS -LP has also vastly surpassed the industry average cash flow growth rate of -86.32%.
  • 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, the stock's 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 the other strengths this company displays justify these higher price levels.
  • The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 15.5% when compared to the same quarter one year ago, dropping from $124.60 million to $105.30 million.
  • EEP's debt-to-equity ratio of 0.88 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.35 is very low and demonstrates very weak liquidity.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TC Pipelines

Dividend Yield: 6.50%

TC Pipelines (NASDAQ: TCP) shares currently have a dividend yield of 6.50%.

TC PipeLines, LP transports natural gas to market hubs and consuming markets primarily in the western and midwestern United States, and central Canada. The company has a P/E ratio of 23.38.

The average volume for TC Pipelines has been 314,800 shares per day over the past 30 days. TC Pipelines has a market cap of $3.1 billion and is part of the energy industry. Shares are up 22.8% year to date as of the close of trading on Monday.

TheStreet Ratings rates TC Pipelines as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins 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:
  • TCP's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • The gross profit margin for TC PIPELINES LP is currently very high, coming in at 81.25%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 143.75% significantly outperformed against the industry average.
  • Despite the stagnant revenue growth, the company outperformed against the industry average of 6.2%. Since the same quarter one year prior, revenues have remained constant. Even though the company's revenue remained stagnant, the earnings per share decreased.
  • 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, the stock's 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 the other strengths this company displays justify these higher price levels.
  • The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 30.3% when compared to the same quarter one year ago, falling from $33.00 million to $23.00 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Hospitality Properties

Dividend Yield: 6.50%

Hospitality Properties (NYSE: HPT) shares currently have a dividend yield of 6.50%.

Hospitality Properties Trust, a real estate investment trust (REIT), engages in buying, owning, and leasing hotels. The company has a P/E ratio of 38.14.

The average volume for Hospitality Properties has been 1,036,800 shares per day over the past 30 days. Hospitality Properties has a market cap of $4.1 billion and is part of the real estate industry. Shares are up 23.6% year to date as of the close of trading on Monday.

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 somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.0%. Since the same quarter one year prior, revenues rose by 17.6%. 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.
  • 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.
  • Net operating cash flow has decreased to $45.20 million or 25.94% when compared to the same quarter last year. Despite a decrease in cash flow of 25.94%, HOSPITALITY PROPERTIES TRUST is still significantly exceeding the industry average of -81.00%.
  • The gross profit margin for HOSPITALITY PROPERTIES TRUST is rather low; currently it is at 17.83%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 7.75% significantly trails the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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