What To Buy: Top 5 Buy-Rated Dividend Stocks: MAA, STWD, GEO, ARE, BWP

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."

Mid-America Apartment Communities

Dividend Yield: 4.40%

Mid-America Apartment Communities (NYSE: MAA) shares currently have a dividend yield of 4.40%.

RF Rev $32.5/$100 Secured 0/$50 Secured 0/$200 Secured. The company has a P/E ratio of 36.19.

The average volume for Mid-America Apartment Communities has been 406,800 shares per day over the past 30 days. Mid-America Apartment Communities has a market cap of $2.7 billion and is part of the real estate industry. Shares are down 3.3% 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 revenue growth, growth in earnings per share, compelling growth in net income, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • MAA's revenue growth has slightly outpaced the industry average of 10.8%. Since the same quarter one year prior, revenues rose by 12.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MID-AMERICA APT CMNTYS INC has improved earnings per share by 5.5% 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 $1.55 versus $0.88 in the prior year. This year, the market expects an improvement in earnings ($2.76 versus $1.55).
  • 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 109.8% when compared to the same quarter one year prior, rising from $28.15 million to $59.05 million.
  • The gross profit margin for MID-AMERICA APT CMNTYS INC is currently lower than what is desirable, coming in at 28.60%. Regardless of MAA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MAA's net profit margin of 44.00% significantly outperformed against the industry.
  • 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.

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

Starwood Property

Dividend Yield: 7.70%

Starwood Property (NYSE: STWD) shares currently have a dividend yield of 7.70%.

Starwood Property Trust, Inc. engages in originating, investing in, financing, and managing commercial mortgage loans, other commercial real estate debt investments, commercial mortgage-backed securities, and other commercial real estate-related debt investments. The company has a P/E ratio of 14.32.

The average volume for Starwood Property has been 2,649,100 shares per day over the past 30 days. Starwood Property has a market cap of $4.0 billion and is part of the real estate industry. Shares are up 4.1% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Starwood Property as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, compelling growth in net income 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:
  • STWD's very impressive revenue growth greatly exceeded the industry average of 10.8%. Since the same quarter one year prior, revenues leaped by 102.8%. 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.
  • STARWOOD PROPERTY 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, STARWOOD PROPERTY TRUST INC increased its bottom line by earning $1.78 versus $1.41 in the prior year. This year, the market expects an improvement in earnings ($2.02 versus $1.78).
  • 48.43% is the gross profit margin for STARWOOD PROPERTY TRUST INC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, STWD's net profit margin of 43.66% significantly outperformed against the industry.
  • In its most recent trading session, STWD has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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, 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 40.0% when compared to the same quarter one year prior, rising from $44.49 million to $62.28 million.

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

Geo Group

Dividend Yield: 6.30%

Geo Group (NYSE: GEO) shares currently have a dividend yield of 6.30%.

The GEO Group, Inc. provides government-outsourced services specializing in the management of correctional, detention, and re-entry facilities, and the provision of community based services and youth services in the United States, Australia, South Africa, the United Kingdom, and Canada. The company has a P/E ratio of 12.23.

The average volume for Geo Group has been 572,000 shares per day over the past 30 days. Geo Group has a market cap of $2.3 billion and is part of the diversified services industry. Shares are up 13.2% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Geo Group as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, notable return on equity, reasonable valuation levels and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 52.0% when compared to the same quarter one year prior, rising from $22.50 million to $34.21 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.8%. Since the same quarter one year prior, revenues slightly increased by 2.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, GEO GROUP INC's return on equity exceeds that of both the industry average and the S&P 500.
  • 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.

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

Alexandria Real Estate Equities

Dividend Yield: 4.30%

Alexandria Real Estate Equities (NYSE: ARE) shares currently have a dividend yield of 4.30%.

Alexandria Real Estate Equities, Inc., a real estate investment trust (REIT), engages in the ownership, operation, management, development, acquisition, and redevelopment of properties for the life sciences industry. The company has a P/E ratio of 47.31.

The average volume for Alexandria Real Estate Equities has been 469,700 shares per day over the past 30 days. Alexandria Real Estate Equities has a market cap of $4.5 billion and is part of the real estate industry. Shares are down 8.6% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Alexandria Real Estate Equities 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, growth in earnings per share 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:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.8%. Since the same quarter one year prior, revenues slightly increased by 5.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has slightly increased to $95.83 million or 3.11% when compared to the same quarter last year. Despite an increase in cash flow, ALEXANDRIA R E EQUITIES INC's average is still marginally south of the industry average growth rate of 5.35%.
  • ALEXANDRIA R E EQUITIES INC reported significant earnings per share improvement 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, ALEXANDRIA R E EQUITIES INC reported lower earnings of $0.99 versus $1.55 in the prior year. This year, the market expects an improvement in earnings ($1.49 versus $0.99).
  • 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 30.5% when compared to the same quarter one year prior, rising from $24.79 million to $32.36 million.

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

Boardwalk Pipeline Partners

Dividend Yield: 7.10%

Boardwalk Pipeline Partners (NYSE: BWP) shares currently have a dividend yield of 7.10%.

Boardwalk Pipeline Partners, LP, through its subsidiaries, engages in the ownership and operation of integrated natural gas and natural gas liquids (NGLs) pipelines, and storage systems in the United States. The company also transports, stores, gathers, and processes natural gas and NGLs. The company has a P/E ratio of 22.31.

The average volume for Boardwalk Pipeline Partners has been 575,400 shares per day over the past 30 days. Boardwalk Pipeline Partners has a market cap of $6.6 billion and is part of the energy industry. Shares are up 20% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Boardwalk Pipeline Partners as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, increase in net income 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:
  • The revenue growth came in higher than the industry average of 6.5%. Since the same quarter one year prior, revenues slightly increased by 4.7%. 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.
  • The gross profit margin for BOARDWALK PIPELINE PRTNRS-LP is rather high; currently it is at 61.79%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 24.41% significantly outperformed against the industry average.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income increased by 8.3% when compared to the same quarter one year prior, going from $65.10 million to $70.50 million.
  • 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.
  • BOARDWALK PIPELINE PRTNRS-LP's earnings per share declined by 6.7% in the most recent quarter compared to the same quarter a year ago. 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, BOARDWALK PIPELINE PRTNRS-LP increased its bottom line by earning $1.37 versus $1.09 in the prior year. For the next year, the market is expecting a contraction of 10.2% in earnings ($1.23 versus $1.37).

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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