5 Buy-Rated Dividend Stocks Leading The Pack: STWD, CLNY, MAT, CIM, KKR

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: 7.60%

Starwood Property (NYSE: STWD) shares currently have a dividend yield of 7.60%.

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 13.54.

The average volume for Starwood Property has been 2,378,500 shares per day over the past 30 days. Starwood Property has a market cap of $4.7 billion and is part of the real estate industry. Shares are down 12.4% year-to-date as of the close of trading on Tuesday.

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 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:
  • STWD's very impressive revenue growth greatly exceeded the industry average of 6.8%. 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 ($1.98 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.
  • STWD has underperformed the S&P 500 Index, declining 8.14% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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: 6.30%

Colony Financial (NYSE: CLNY) shares currently have a dividend yield of 6.30%.

Colony Financial, Inc. operates as a real estate investment and finance company in the United States. The company has a P/E ratio of 19.43.

The average volume for Colony Financial has been 787,600 shares per day over the past 30 days. Colony Financial has a market cap of $1.7 billion and is part of the real estate industry. Shares are up 12% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Colony Financial as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, good cash flow from operations, compelling growth in net income 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 6.8%. 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 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.
  • Net operating cash flow has significantly increased by 98.32% to $32.77 million when compared to the same quarter last year. In addition, COLONY FINANCIAL INC has also vastly surpassed the industry average cash flow growth rate of -56.67%.
  • 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.
  • 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.

Mattel

Dividend Yield: 4.10%

Mattel (NASDAQ: MAT) shares currently have a dividend yield of 4.10%.

Mattel, Inc., together with its subsidiaries, designs, manufactures, and markets various toy products. The company operates in three segments: North America, International, and American Girl. Its products comprise fashion dolls and accessories, vehicles and play sets, and games and puzzles. The company has a P/E ratio of 14.89.

The average volume for Mattel has been 3,227,100 shares per day over the past 30 days. Mattel has a market cap of $12.4 billion and is part of the consumer durables industry. Shares are down 22% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Mattel as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, notable return on equity 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:
  • MATTEL INC has improved earnings per share by 23.0% 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 year. We feel that this trend should continue. During the past fiscal year, MATTEL INC increased its bottom line by earning $2.60 versus $2.21 in the prior year. This year, the market expects an improvement in earnings ($2.66 versus $2.60).
  • The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, MAT has a quick ratio of 2.20, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 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 Leisure Equipment & Products industry and the overall market on the basis of return on equity, MATTEL INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • The gross profit margin for MATTEL INC is rather high; currently it is at 54.46%. Regardless of MAT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MAT's net profit margin of 17.47% compares favorably to 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.

Chimera Investment Corporation

Dividend Yield: 11.60%

Chimera Investment Corporation (NYSE: CIM) shares currently have a dividend yield of 11.60%.

Chimera Investment Corporation operates as a real estate investment trust (REIT) in the United States. The company has a P/E ratio of 9.72.

The average volume for Chimera Investment Corporation has been 8,590,500 shares per day over the past 30 days. Chimera Investment Corporation has a market cap of $3.2 billion and is part of the real estate industry. Shares are up 1.3% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Chimera Investment Corporation as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, attractive valuation levels, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • CHIMERA INVESTMENT 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 year. We feel that this trend should continue. During the past fiscal year, CHIMERA INVESTMENT CORP increased its bottom line by earning $0.32 versus $0.13 in the prior year. This year, the market expects an improvement in earnings ($0.40 versus $0.32).
  • 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 84.1% when compared to the same quarter one year prior, rising from $42.75 million to $78.69 million.
  • The gross profit margin for CHIMERA INVESTMENT CORP is currently very high, coming in at 89.95%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 58.91% significantly outperformed against the industry average.
  • 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CHIMERA INVESTMENT CORP's return on equity is equivalent to the industry average, but CIM has underperformed when compared to 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.

KKR

Dividend Yield: 7.80%

KKR (NYSE: KKR) shares currently have a dividend yield of 7.80%.

Kohlberg Kravis Roberts & Co. is a private equity investment firm specializing in acquisitions, leveraged buyouts, management buyouts, special situations, growth equity, mature, and middle market investments. The company has a P/E ratio of 10.64.

The average volume for KKR has been 2,339,900 shares per day over the past 30 days. KKR has a market cap of $7.1 billion and is part of the financial services industry. Shares are down 0.4% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates KKR as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 147.22% and other important driving factors, this stock has surged by 34.36% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, KKR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • KKR & CO LP 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, KKR & CO LP increased its bottom line by earning $2.29 versus $2.23 in the prior year. This year, the market expects an improvement in earnings ($2.77 versus $2.29).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 187.3% when compared to the same quarter one year prior, rising from $96.73 million to $277.91 million.
  • KKR, with its decline in revenue, underperformed when compared the industry average of 16.8%. Since the same quarter one year prior, revenues fell by 29.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for KKR & CO LP is currently extremely low, coming in at 13.76%. It has decreased significantly from the same period last year. Despite the weak results of the gross profit margin, the net profit margin of 41.29% has 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.

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