Buy-Rated Dividend Stocks In The Top 5: BCE, HCP, EPB, OHI, SDRL

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."

BCE

Dividend Yield: 5.20%

BCE (NYSE: BCE) shares currently have a dividend yield of 5.20%.

BCE Inc. provides communications solutions to residential, business, and wholesale customers primarily in Canada. The company has a P/E ratio of 14.62.

The average volume for BCE has been 578,400 shares per day over the past 30 days. BCE has a market cap of $32.9 billion and is part of the telecommunications industry. Shares are down 0.7% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates BCE 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 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:
  • BCE's revenue growth has slightly outpaced the industry average of 3.6%. Since the same quarter one year prior, revenues slightly increased by 2.3%. 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 slightly increased to $1,730.00 million or 8.87% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -7.48%.
  • 49.85% is the gross profit margin for BCE INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.35% trails the industry average.
  • BCE INC's earnings per share declined by 35.3% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, BCE INC increased its bottom line by earning $3.22 versus $2.87 in the prior year.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Diversified Telecommunication Services industry and the overall market, BCE INC's return on equity exceeds 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.

HCP

Dividend Yield: 5.70%

HCP (NYSE: HCP) shares currently have a dividend yield of 5.70%.

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 18.99.

The average volume for HCP has been 2,879,900 shares per day over the past 30 days. HCP has a market cap of $16.8 billion and is part of the real estate industry. Shares are down 20.7% year-to-date as of the close of trading on Thursday.

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 9.6%. 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. In addition, HCP INC has also modestly surpassed the industry average cash flow growth rate of 8.47%.
  • 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.

El Paso Pipeline Partners

Dividend Yield: 7.60%

El Paso Pipeline Partners (NYSE: EPB) shares currently have a dividend yield of 7.60%.

El Paso Pipeline Partners, L.P. engages in the ownership and operation of interstate natural gas transportation and terminaling facilities in the United States. The company has a P/E ratio of 17.00.

The average volume for El Paso Pipeline Partners has been 696,100 shares per day over the past 30 days. El Paso Pipeline Partners has a market cap of $7.4 billion and is part of the energy industry. Shares are down 7.6% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates El Paso Pipeline Partners 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, notable return on equity and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • EPB's revenue growth has slightly outpaced the industry average of 5.4%. Since the same quarter one year prior, revenues slightly increased by 0.3%. 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 $233.00 million or 18.27% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 1.10%.
  • The gross profit margin for EL PASO PIPELINE PARTNERS LP is currently very high, coming in at 70.73%. Regardless of EPB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EPB's net profit margin of 38.21% 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. In comparison to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, EL PASO PIPELINE PARTNERS LP has underperformed in comparison with the industry average, but has greatly exceeded that of 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.

Omega Healthcare Investors

Dividend Yield: 6.30%

Omega Healthcare Investors (NYSE: OHI) shares currently have a dividend yield of 6.30%.

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 22.00.

The average volume for Omega Healthcare Investors has been 1,049,900 shares per day over the past 30 days. Omega Healthcare Investors has a market cap of $3.7 billion and is part of the real estate industry. Shares are up 25.6% 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 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:
  • OHI's revenue growth has slightly outpaced the industry average of 9.6%. 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 30.95% 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.

Seadrill

Dividend Yield: 9.60%

Seadrill (NYSE: SDRL) shares currently have a dividend yield of 9.60%.

Seadrill Limited provides offshore drilling services to the oil and gas industry worldwide. The company operates in three segments: Floaters, Jack-up Rigs, and Tender Rigs. The company has a P/E ratio of 8.32.

The average volume for Seadrill has been 2,388,200 shares per day over the past 30 days. Seadrill has a market cap of $18.6 billion and is part of the energy industry. Shares are up 4.7% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Seadrill as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, compelling growth in net income, good cash flow from operations and increase in stock price during the past year. 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:
  • SDRL's revenue growth has slightly outpaced the industry average of 9.2%. Since the same quarter one year prior, revenues rose by 17.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, SEADRILL LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 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 52.1% when compared to the same quarter one year prior, rising from $188.00 million to $286.00 million.
  • Net operating cash flow has increased to $533.00 million or 29.05% when compared to the same quarter last year. Despite an increase in cash flow, SEADRILL LTD's average is still marginally south of the industry average growth rate of 30.69%.
  • 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, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over 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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