5 Buy-Rated Dividend Stocks Leading The Pack: MPW, RWT, OHI, TEF, RIG

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."

Medical Properties

Dividend Yield: 6.60%

Medical Properties (NYSE: MPW) shares currently have a dividend yield of 6.60%.

Medical Properties Trust, Inc. operates as a real estate investment trust (REIT) in the United States. It acquires, develops, and invests in healthcare facilities; and leases healthcare facilities to healthcare operating companies and healthcare providers. The company has a P/E ratio of 18.48.

The average volume for Medical Properties has been 1,159,100 shares per day over the past 30 days. Medical Properties has a market cap of $2.1 billion and is part of the real estate industry. Shares are up 6% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Medical Properties as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins, increase in stock price during the past year 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:
  • MPW's revenue growth has slightly outpaced the industry average of 9.5%. Since the same quarter one year prior, revenues rose by 13.7%. 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.
  • Net operating cash flow has increased to $45.32 million or 49.63% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 8.44%.
  • The gross profit margin for MEDICAL PROPERTIES TRUST is rather high; currently it is at 67.69%. Regardless of MPW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MPW's net profit margin of 41.84% significantly outperformed against the industry.
  • 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.
  • MEDICAL PROPERTIES TRUST's earnings per share declined by 5.9% 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, MEDICAL PROPERTIES TRUST increased its bottom line by earning $0.56 versus $0.13 in the prior year. This year, the market expects an improvement in earnings ($0.75 versus $0.56).

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

Redwood

Dividend Yield: 6.10%

Redwood (NYSE: RWT) shares currently have a dividend yield of 6.10%.

Redwood Trust, Inc. engages in investing, financing, and managing real estate-related assets. The company has a P/E ratio of 8.57.

The average volume for Redwood has been 1,007,600 shares per day over the past 30 days. Redwood has a market cap of $1.5 billion and is part of the real estate industry. Shares are up 7.4% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Redwood as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, reasonable valuation levels, good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • 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, REDWOOD TRUST INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 302.35% to $248.09 million when compared to the same quarter last year. In addition, REDWOOD TRUST INC has also vastly surpassed the industry average cash flow growth rate of 8.44%.
  • The gross profit margin for REDWOOD TRUST INC is rather high; currently it is at 58.93%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, RWT's net profit margin of 38.18% significantly outperformed against the industry.
  • 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.

Omega Healthcare Investors

Dividend Yield: 6.10%

Omega Healthcare Investors (NYSE: OHI) shares currently have a dividend yield of 6.10%.

Omega Healthcare Investors, Inc. is a real estate investment firm. The firm invests in the real estate markets of United States. It invests in healthcare facilities, primarily in long-term healthcare facilities in order to create its portfolio. Omega Healthcare Investors, Inc. The company has a P/E ratio of 22.79.

The average volume for Omega Healthcare Investors has been 1,027,100 shares per day over the past 30 days. Omega Healthcare Investors has a market cap of $3.9 billion and is part of the real estate industry. Shares are up 32.8% year-to-date as of the close of trading on Thursday.

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, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. 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:
  • OHI's revenue growth has slightly outpaced the industry average of 9.5%. Since the same quarter one year prior, revenues rose by 18.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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 40.44% 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, OHI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • OMEGA HEALTHCARE INVS INC has improved earnings per share by 18.5% 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, 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 ($1.41 versus $1.11).
  • 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 26.6% when compared to the same quarter one year prior, rising from $30.12 million to $38.14 million.
  • The gross profit margin for OMEGA HEALTHCARE INVS INC is rather high; currently it is at 61.30%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 36.91% significantly outperformed against the industry average.

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

Telefonica

Dividend Yield: 5.90%

Telefonica (NYSE: TEF) shares currently have a dividend yield of 5.90%.

Telefonica, S.A. provides fixed and mobile communication services primarily in Europe and Latin America. The company offers mobile voice, value added, mobile data and Internet, wholesale, corporate, roaming, fixed wireless, and trunking and paging services, as well as mobile payment solutions.

The average volume for Telefonica has been 1,278,600 shares per day over the past 30 days. Telefonica has a market cap of $72.2 billion and is part of the telecommunications industry. Shares are up 16.1% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Telefonica as a buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year 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:
  • TEF's share price has surged by 26.83% over the past year, reflecting the market's general trend, despite their weak earnings growth during the last quarter. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TEF should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.4%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • TELEFONICA SA's earnings per share declined by 12.5% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, TELEFONICA SA reported lower earnings of $1.14 versus $1.57 in the prior year. This year, the market expects an improvement in earnings ($1.51 versus $1.14).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Diversified Telecommunication Services industry and the overall market, TELEFONICA SA's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • The gross profit margin for TELEFONICA SA is currently lower than what is desirable, coming in at 32.23%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 7.70% trails that of the industry average.

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

Transocean

Dividend Yield: 4.50%

Transocean (NYSE: RIG) shares currently have a dividend yield of 4.50%.

Transocean Ltd. provides offshore contract drilling services for oil and gas wells worldwide. It offers deepwater and harsh environment drilling, oil and gas drilling management, and drilling engineering and drilling project management services, as well as logistics services. The company has a P/E ratio of 11.28.

The average volume for Transocean has been 5,835,300 shares per day over the past 30 days. Transocean has a market cap of $18.1 billion and is part of the energy industry. Shares are up 11.3% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Transocean as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, attractive valuation levels, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 243.3% when compared to the same quarter one year prior, rising from -$381.00 million to $546.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.3%. Since the same quarter one year prior, revenues slightly increased by 5.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • TRANSOCEAN LTD reported flat earnings per share in the most recent 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, TRANSOCEAN LTD turned its bottom line around by earning $2.24 versus -$17.75 in the prior year. This year, the market expects an improvement in earnings ($4.16 versus $2.24).
  • 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.

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