4 Buy-Rated Dividend Stocks To Check Out: HCP, PDLI, CLNY, LEG

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: 5.30%

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

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 20.40.

The average volume for HCP has been 2,798,600 shares per day over the past 30 days. HCP has a market cap of $18.1 billion and is part of the real estate industry. Shares are down 12.4% year to date as of the close of trading on Friday.

TheStreet Ratings rates HCP 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, good cash flow from operations and expanding profit margins. 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 9.4%. Since the same quarter one year prior, revenues rose by 15.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HCP INC has improved earnings per share by 9.1% 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, HCP INC increased its bottom line by earning $1.79 versus $1.27 in the prior year. This year, the market expects an improvement in earnings ($1.97 versus $1.79).
  • 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 19.2% when compared to the same quarter one year prior, going from $196.11 million to $233.76 million.
  • Net operating cash flow has increased to $272.08 million or 14.60% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 1.41%.
  • The gross profit margin for HCP INC is rather high; currently it is at 59.33%. 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 41.90% significantly outperformed against the industry.

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

PDL BioPharma

Dividend Yield: 6.70%

PDL BioPharma (NASDAQ: PDLI) shares currently have a dividend yield of 6.70%.

PDL BioPharma, Inc. engages in intellectual property asset management and patent portfolio and related assets investment activities. The company has a P/E ratio of 5.34.

The average volume for PDL BioPharma has been 1,747,300 shares per day over the past 30 days. PDL BioPharma has a market cap of $1.3 billion and is part of the drugs industry. Shares are up 27.3% year to date as of the close of trading on Friday.

TheStreet Ratings rates PDL BioPharma as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, revenue growth, growth in earnings per share, good cash flow from operations and expanding profit margins. 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:
  • Compared to other companies in the Biotechnology industry and the overall market, PDL BIOPHARMA INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • PDLI's revenue growth has slightly outpaced the industry average of 10.4%. Since the same quarter one year prior, revenues rose by 14.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • PDL BIOPHARMA INC has improved earnings per share by 12.5% 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, PDL BIOPHARMA INC increased its bottom line by earning $1.47 versus $1.15 in the prior year. This year, the market expects an improvement in earnings ($1.78 versus $1.47).
  • Net operating cash flow has increased to $45.83 million or 27.90% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.74%.
  • The gross profit margin for PDL BIOPHARMA INC is currently very high, coming in at 91.86%. Regardless of PDLI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PDLI's net profit margin of 57.77% significantly outperformed against the industry.

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

Colony Financial

Dividend Yield: 7.00%

Colony Financial (NYSE: CLNY) shares currently have a dividend yield of 7.00%.

Colony Financial, Inc. operates as a real estate investment and finance company in the United States. The company has a P/E ratio of 17.36.

The average volume for Colony Financial has been 609,100 shares per day over the past 30 days. Colony Financial has a market cap of $1.5 billion and is part of the real estate industry. Shares are up 2.4% year to date as of the close of trading on Friday.

TheStreet Ratings rates Colony Financial as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, expanding profit margins, increase in stock price during the past year and growth in earnings per share. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • CLNY's very impressive revenue growth greatly exceeded the industry average of 9.4%. Since the same quarter one year prior, revenues leaped by 79.3%. 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 significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 70.0% when compared to the same quarter one year prior, rising from $15.56 million to $26.45 million.
  • The gross profit margin for COLONY FINANCIAL INC is currently very high, coming in at 81.33%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 54.54% significantly outperformed against the industry average.
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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.
  • COLONY FINANCIAL INC has improved earnings per share by 6.7% 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, COLONY FINANCIAL INC reported lower earnings of $1.34 versus $1.48 in the prior year. This year, the market expects an improvement in earnings ($1.38 versus $1.34).

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

Leggett & Platt

Dividend Yield: 4.10%

Leggett & Platt (NYSE: LEG) shares currently have a dividend yield of 4.10%.

Leggett & Platt, Incorporated designs and produces various engineered components and products worldwide. The company has a P/E ratio of 16.57.

The average volume for Leggett & Platt has been 1,068,800 shares per day over the past 30 days. Leggett & Platt has a market cap of $4.2 billion and is part of the consumer durables industry. Shares are up 8.3% year to date as of the close of trading on Friday.

TheStreet Ratings rates Leggett & Platt 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, reasonable valuation levels, good cash flow from operations, notable return on equity 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 debt-to-equity ratio is somewhat low, currently at 0.66, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.37, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to $115.60 million or 22.06% when compared to the same quarter last year. Despite an increase in cash flow of 22.06%, LEGGETT & PLATT INC is still growing at a significantly lower rate than the industry average of 86.90%.
  • 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 Household Durables industry and the overall market on the basis of return on equity, LEGGETT & PLATT INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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.

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