5 Buy-Rated Dividend Stocks: DLR, VZ, OHI, RGR, PBCT

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

Digital Realty

Dividend Yield: 5.70%

Digital Realty (NYSE: DLR) shares currently have a dividend yield of 5.70%.

Digital Realty Trust, Inc., a real estate investment trust (REIT), through its controlling interest in Digital Realty Trust, L.P., engages in the ownership, acquisition, development, redevelopment, and management of technology-related real estate. The company has a P/E ratio of 38.47.

The average volume for Digital Realty has been 1,840,700 shares per day over the past 30 days. Digital Realty has a market cap of $7.1 billion and is part of the real estate industry. Shares are down 18.3% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Digital Realty as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

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 18.6%. 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.
  • DIGITAL REALTY TRUST 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, DIGITAL REALTY TRUST INC increased its bottom line by earning $1.47 versus $1.31 in the prior year. For the next year, the market is expecting a contraction of 6.1% in earnings ($1.38 versus $1.47).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Real Estate Investment Trusts (REITs) industry average, but is greater than that of the S&P 500. The net income increased by 11.7% when compared to the same quarter one year prior, going from $52.33 million to $58.48 million.
  • Looking at the price performance of DLR's shares over the past 12 months, there is not much good news to report: the stock is down 29.15%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Looking ahead, the stock's sharp decline over the past year may have been what was needed in order to bring its value into alignment with its fundamentals and others in its industry.

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

Verizon Communications

Dividend Yield: 4.10%

Verizon Communications (NYSE: VZ) shares currently have a dividend yield of 4.10%.

Verizon Communications Inc., through its subsidiaries, provides communications, information and entertainment products and services to consumers, businesses, and governmental agencies worldwide. The company has a P/E ratio of 92.98.

The average volume for Verizon Communications has been 11,380,700 shares per day over the past 30 days. Verizon Communications has a market cap of $143.7 billion and is part of the telecommunications industry. Shares are up 15.8% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Verizon Communications as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • VZ's revenue growth has slightly outpaced the industry average of 2.3%. Since the same quarter one year prior, revenues slightly increased by 4.3%. 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 exceeded that of the S&P 500 and greatly outperformed compared to the Diversified Telecommunication Services industry average. The net income increased by 23.1% when compared to the same quarter one year prior, going from $1,825.00 million to $2,246.00 million.
  • Net operating cash flow has slightly increased to $9,617.00 million or 3.25% when compared to the same quarter last year. In addition, VERIZON COMMUNICATIONS INC has also modestly surpassed the industry average cash flow growth rate of -5.51%.
  • The gross profit margin for VERIZON COMMUNICATIONS INC is rather high; currently it is at 62.96%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.54% trails the industry average.
  • VERIZON COMMUNICATIONS INC has improved earnings per share by 21.9% 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, VERIZON COMMUNICATIONS INC reported lower earnings of $0.31 versus $0.86 in the prior year. This year, the market expects an improvement in earnings ($2.79 versus $0.31).

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

Omega Healthcare Investors

Dividend Yield: 6.20%

Omega Healthcare Investors (NYSE: OHI) shares currently have a dividend yield of 6.20%.

Omega Healthcare Investors, Inc. operates as a real estate investment trust (REIT) in the United States. The company invests in healthcare facilities, principally long-term healthcare facilities in the United States. The company has a P/E ratio of 22.69.

The average volume for Omega Healthcare Investors has been 1,560,500 shares per day over the past 30 days. Omega Healthcare Investors has a market cap of $3.5 billion and is part of the real estate industry. Shares are up 26.8% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Omega Healthcare Investors as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, expanding profit margins, solid stock price performance and impressive record of earnings per share growth. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

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 22.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, OMEGA HEALTHCARE INVS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for OMEGA HEALTHCARE INVS INC is rather high; currently it is at 63.15%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 47.84% significantly outperformed against the industry average.
  • 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. 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.
  • OMEGA HEALTHCARE INVS INC has improved earnings per share by 44.8% 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, OMEGA HEALTHCARE INVS INC increased its bottom line by earning $1.11 versus $0.46 in the prior year. This year, the market expects an improvement in earnings ($1.35 versus $1.11).

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

Sturm Ruger & Company

Dividend Yield: 4.70%

Sturm Ruger & Company (NYSE: RGR) shares currently have a dividend yield of 4.70%.

Sturm, Ruger & Company, Inc. engages in the design, manufacture, and sale of firearms in the United States. The company offers single-shot, auto loading, bolt-action, and sporting rifles; single-action and double-action revolvers; and rim fire auto loading and center fire auto loading pistols. The company has a P/E ratio of 11.72.

The average volume for Sturm Ruger & Company has been 310,900 shares per day over the past 30 days. Sturm Ruger & Company has a market cap of $1.1 billion and is part of the aerospace/defense industry. Shares are up 21.5% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Sturm Ruger & Company as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 6.2%. Since the same quarter one year prior, revenues rose by 38.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • RGR has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.30, which illustrates the ability to avoid short-term cash problems.
  • 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 Leisure Equipment & Products industry and the overall market, STURM RUGER & CO INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 42.21% is the gross profit margin for STURM RUGER & CO INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.21% is above that of the industry average.
  • Net operating cash flow has increased to $30.41 million or 39.21% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 15.03%.

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

People's United Financial

Dividend Yield: 4.30%

People's United Financial (NASDAQ: PBCT) shares currently have a dividend yield of 4.30%.

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 21.08.

The average volume for People's United Financial has been 4,011,900 shares per day over the past 30 days. People's United Financial has a market cap of $5.0 billion and is part of the banking industry. Shares are up 24.2% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates People's United Financial 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, reasonable valuation levels, expanding profit margins 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:
  • 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 35.00% 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, PBCT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • PEOPLE'S UNITED FINL INC has improved earnings per share by 5.3% 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 ($0.78 versus $0.72).
  • The gross profit margin for PEOPLE'S UNITED FINL INC is currently very high, coming in at 88.58%. Regardless of PBCT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PBCT's net profit margin of 18.47% is significantly lower than the industry average.
  • The revenue fell significantly faster than the industry average of 50.6%. Since the same quarter one year prior, revenues slightly dropped by 0.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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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