3 Buy-Rated Dividend Stocks Leading The Pack: VTR, EPR, MWE

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

Ventas

Dividend Yield: 4.80%

Ventas (NYSE: VTR) shares currently have a dividend yield of 4.80%.

Ventas, Inc. is a publicly owned real estate investment trust. The firm engages in investment, management, financing, and leasing of properties in the healthcare industry. It invests in the real estate markets of the United States and Canada. The company has a P/E ratio of 34.73.

The average volume for Ventas has been 1,431,600 shares per day over the past 30 days. Ventas has a market cap of $16.5 billion and is part of the real estate industry. Shares are down 13.1% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Ventas 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 lackluster performance in the stock itself.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.5%. Since the same quarter one year prior, revenues slightly increased by 8.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has increased to $327.74 million or 31.88% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 8.44%.
  • VENTAS INC has improved earnings per share by 10.3% 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, VENTAS INC reported lower earnings of $1.04 versus $1.41 in the prior year. This year, the market expects an improvement in earnings ($1.56 versus $1.04).
  • 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 the Real Estate Investment Trusts (REITs) industry average. The net income increased by 5.7% when compared to the same quarter one year prior, going from $111.88 million to $118.30 million.

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

EPR Properties

Dividend Yield: 6.20%

EPR Properties (NYSE: EPR) shares currently have a dividend yield of 6.20%.

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 21.08.

The average volume for EPR Properties has been 380,900 shares per day over the past 30 days. EPR Properties has a market cap of $2.6 billion and is part of the real estate industry. Shares are up 8.2% year-to-date as of the close of trading on Tuesday.

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

Highlights from the ratings report include:
  • EPR PROPERTIES has improved earnings per share by 8.9% 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 $2.29 versus $1.62 in the prior year. This year, the market expects an improvement in earnings ($2.80 versus $2.29).
  • 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 27.4% when compared to the same quarter one year prior, rising from $34.15 million to $43.50 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.5%. Since the same quarter one year prior, revenues slightly increased by 7.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has slightly increased to $45.65 million or 8.78% when compared to the same quarter last year. In addition, EPR PROPERTIES has also modestly surpassed the industry average cash flow growth rate of 8.44%.
  • The gross profit margin for EPR PROPERTIES is rather high; currently it is at 69.38%. Regardless of EPR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EPR's net profit margin of 49.31% 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.

MarkWest Energy Partners

Dividend Yield: 5.00%

MarkWest Energy Partners (NYSE: MWE) shares currently have a dividend yield of 5.00%.

Markwest Energy Partners, L.P., together with its subsidiaries, engages in the gathering, processing, and transportation of natural gas the United States. The company has a P/E ratio of 138.57.

The average volume for MarkWest Energy Partners has been 773,400 shares per day over the past 30 days. MarkWest Energy Partners has a market cap of $10.2 billion and is part of the energy industry. Shares are up 32.3% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates MarkWest 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 solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 5.4%. Since the same quarter one year prior, revenues rose by 49.9%. 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 $153.06 million or 14.84% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 1.02%.
  • Compared to its closing price of one year ago, MWE's share price has jumped by 37.56%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • MARKWEST ENERGY PARTNERS LP's earnings per share declined by 30.8% 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, MARKWEST ENERGY PARTNERS LP increased its bottom line by earning $1.70 versus $0.80 in the prior year. For the next year, the market is expecting a contraction of 67.9% in earnings ($0.55 versus $1.70).
  • MWE's debt-to-equity ratio of 0.85 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. Despite the fact that MWE's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.61 is low and demonstrates 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.

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