5 Buy-Rated Dividend Stocks Leading The Pack: STWD, GEL, SO, KIM, CXW

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."

Starwood Property

Dividend Yield: 6.70%

Starwood Property (NYSE: STWD) shares currently have a dividend yield of 6.70%.

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 15.47.

The average volume for Starwood Property has been 2,541,600 shares per day over the past 30 days. Starwood Property has a market cap of $5.4 billion and is part of the real estate industry. Shares are up 20.5% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Starwood Property as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, compelling growth in net income, 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 disappointing return on equity.

Highlights from the ratings report include:
  • STWD's very impressive revenue growth greatly exceeded the industry average of 9.5%. Since the same quarter one year prior, revenues leaped by 117.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • STARWOOD PROPERTY TRUST INC has improved earnings per share by 20.9% 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, 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).
  • 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 78.7% when compared to the same quarter one year prior, rising from $50.21 million to $89.72 million.
  • 46.15% 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 56.03% significantly outperformed against the industry.
  • 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.

Genesis Energy

Dividend Yield: 4.10%

Genesis Energy (NYSE: GEL) shares currently have a dividend yield of 4.10%.

Genesis Energy, L.P. operates in the midstream segment of the oil and gas industry in the Gulf Coast region of the United States. It operates through three segments: Pipeline Transportation, Refinery Services, and Supply and Logistics. The company has a P/E ratio of 43.73.

The average volume for Genesis Energy has been 251,700 shares per day over the past 30 days. Genesis Energy has a market cap of $4.5 billion and is part of the energy industry. Shares are up 40.6% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Genesis Energy as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, largely solid financial position with reasonable debt levels by most measures 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:
  • The revenue growth came in higher than the industry average of 5.4%. Since the same quarter one year prior, revenues rose by 20.9%. 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.
  • Compared to its closing price of one year ago, GEL's share price has jumped by 48.05%, 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.
  • GEL's debt-to-equity ratio of 0.99 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. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.93 is weak.
  • 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, GENESIS ENERGY -LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • GENESIS ENERGY -LP's earnings per share declined by 43.6% 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, GENESIS ENERGY -LP increased its bottom line by earning $1.23 versus $0.75 in the prior year. For the next year, the market is expecting a contraction of 0.8% in earnings ($1.22 versus $1.23).

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

Southern

Dividend Yield: 5.00%

Southern (NYSE: SO) shares currently have a dividend yield of 5.00%.

The Southern Company, together with its subsidiaries, operates as a public electric utility company. The company has a P/E ratio of 22.22.

The average volume for Southern has been 5,548,000 shares per day over the past 30 days. Southern has a market cap of $36.0 billion and is part of the utilities industry. Shares are down 4% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Southern as a buy. The company's strengths can be seen in multiple areas, such as its 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:
  • Net operating cash flow has slightly increased to $2,464.00 million or 7.73% when compared to the same quarter last year. In addition, SOUTHERN CO has also modestly surpassed the industry average cash flow growth rate of 1.02%.
  • SOUTHERN CO's earnings per share declined by 12.6% 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, SOUTHERN CO increased its bottom line by earning $2.67 versus $2.55 in the prior year. This year, the market expects an improvement in earnings ($2.68 versus $2.67).
  • 42.28% is the gross profit margin for SOUTHERN CO which we consider to be strong. Regardless of SO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SO's net profit margin of 17.32% compares favorably to the industry average.
  • SO, with its decline in revenue, slightly underperformed the industry average of 1.9%. Since the same quarter one year prior, revenues slightly dropped by 0.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Even though the current debt-to-equity ratio is 1.17, it is still below the industry average, suggesting that this level of debt is acceptable within the Electric Utilities industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.40 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.

Kimco Realty

Dividend Yield: 4.40%

Kimco Realty (NYSE: KIM) shares currently have a dividend yield of 4.40%.

Kimco Realty Corporation is an independent real estate investment trust. The firm invests in the real estate markets across North America. It is primarily engaged in acquisitions, development, and management of neighborhood and community shopping centers. The company has a P/E ratio of 59.03.

The average volume for Kimco Realty has been 3,806,600 shares per day over the past 30 days. Kimco Realty has a market cap of $8.5 billion and is part of the real estate industry. Shares are up 7.1% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Kimco Realty as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, reasonable valuation levels, good cash flow from operations 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 revenue growth came in higher than the industry average of 9.5%. Since the same quarter one year prior, revenues rose by 34.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • KIMCO REALTY CORP reported significant earnings per share improvement 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, KIMCO REALTY CORP increased its bottom line by earning $0.27 versus $0.21 in the prior year. This year, the market expects an improvement in earnings ($0.44 versus $0.27).
  • Net operating cash flow has significantly increased by 103.02% to $268.31 million when compared to the same quarter last year. In addition, KIMCO REALTY CORP has also vastly surpassed the industry average cash flow growth rate of 8.44%.
  • 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. 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.

Corrections Corporation of America

Dividend Yield: 5.70%

Corrections Corporation of America (NYSE: CXW) shares currently have a dividend yield of 5.70%.

Corrections Corporation of America, together with its subsidiaries, owns and operates privatized correctional and detention facilities in the United States. The company has a P/E ratio of 11.96.

The average volume for Corrections Corporation of America has been 861,700 shares per day over the past 30 days. Corrections Corporation of America has a market cap of $3.9 billion and is part of the diversified services industry. Shares are down 6% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Corrections Corporation of America as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, compelling growth in net income, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • CORRECTIONS CORP AMER has improved earnings per share by 7.1% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, CORRECTIONS CORP AMER increased its bottom line by earning $1.56 versus $1.55 in the prior year. This year, the market expects an improvement in earnings ($1.88 versus $1.56).
  • 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 22.4% when compared to the same quarter one year prior, going from $42.34 million to $51.84 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CORRECTIONS CORP AMER's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • Net operating cash flow has slightly increased to $100.75 million or 8.28% when compared to the same quarter last year. Despite an increase in cash flow, CORRECTIONS CORP AMER's average is still marginally south of the industry average growth rate of 8.44%.
  • CXW, with its decline in revenue, underperformed when compared the industry average of 9.5%. Since the same quarter one year prior, revenues slightly dropped by 3.3%. 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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