3 Buy-Rated Dividend Stocks Taking The Lead: AEP, MAC, LPT

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."

American Electric Power

Dividend Yield: 4.10%

American Electric Power (NYSE: AEP) shares currently have a dividend yield of 4.10%.

American Electric Power Company, Inc., a public utility holding company, is engaged in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers. The company has a P/E ratio of 16.20.

The average volume for American Electric Power has been 2,710,600 shares per day over the past 30 days. American Electric Power has a market cap of $24.0 billion and is part of the utilities industry. Shares are up 5.4% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates American Electric Power as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, 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:
  • AEP's revenue growth has slightly outpaced the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 4.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • AMERICAN ELECTRIC POWER CO 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, AMERICAN ELECTRIC POWER CO increased its bottom line by earning $3.04 versus $2.60 in the prior year. This year, the market expects an improvement in earnings ($3.33 versus $3.04).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 1547.6% when compared to the same quarter one year prior, rising from $21.00 million to $346.00 million.
  • 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 Electric Utilities industry and the overall market on the basis of return on equity, AMERICAN ELECTRIC POWER CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Net operating cash flow has increased to $1,066.00 million or 19.50% when compared to the same quarter last year. Despite an increase in cash flow, AMERICAN ELECTRIC POWER CO's cash flow growth rate is still lower than the industry average growth rate of 42.69%.

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

Macerich Company

Dividend Yield: 4.10%

Macerich Company (NYSE: MAC) shares currently have a dividend yield of 4.10%.

The Macerich Company is an independent real estate investment trust. The firm invests in the real estate markets of the United States. The company has a P/E ratio of 57.66.

The average volume for Macerich Company has been 852,800 shares per day over the past 30 days. Macerich Company has a market cap of $8.6 billion and is part of the real estate industry. Shares are up 3.8% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Macerich Company as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.7%. Since the same quarter one year prior, revenues rose by 26.8%. 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.
  • The gross profit margin for MACERICH CO is currently lower than what is desirable, coming in at 28.43%. Regardless of MAC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MAC's net profit margin of 48.06% significantly outperformed against the industry.
  • In its most recent trading session, MAC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • MACERICH CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, MACERICH CO reported lower earnings of $0.98 versus $2.07 in the prior year. For the next year, the market is expecting a contraction of 25.5% in earnings ($0.73 versus $0.98).

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

Liberty Property

Dividend Yield: 5.00%

Liberty Property (NYSE: LPT) shares currently have a dividend yield of 5.00%.

Liberty Property Trust is a publicly owned real estate investment holding trust. Through its subsidiary, it provides leasing, property management, development, acquisition, and other tenant-related services for a portfolio of industrial and office properties. The company has a P/E ratio of 54.66.

The average volume for Liberty Property has been 1,069,000 shares per day over the past 30 days. Liberty Property has a market cap of $5.6 billion and is part of the real estate industry. Shares are unchanged year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Liberty Property as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth and compelling growth in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.7%. Since the same quarter one year prior, revenues rose by 33.7%. 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.
  • 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 81.3% when compared to the same quarter one year prior, rising from $38.43 million to $69.69 million.
  • LIBERTY PROPERTY TRUST's earnings per share declined by 31.6% 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 two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, LIBERTY PROPERTY TRUST reported lower earnings of $0.70 versus $0.76 in the prior year. This year, the market expects an improvement in earnings ($0.98 versus $0.70).
  • In its most recent trading session, LPT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • The gross profit margin for LIBERTY PROPERTY TRUST is currently lower than what is desirable, coming in at 28.83%. It has decreased from the same quarter the previous year. Despite the weak results of the gross profit margin, the net profit margin of 35.38% 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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