Buy-Rated Dividend Stocks: Top 3 Companies: LHO, ESV, WPC

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 which could 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."

LaSalle Hotel Properties

Dividend Yield: 4.20%

LaSalle Hotel Properties (NYSE: LHO) shares currently have a dividend yield of 4.20%.

LaSalle Hotel Properties, a real estate investment trust (REIT), engages in the purchase, ownership, redevelopment, and leasing of primarily upscale and luxury full-service hotels in convention, resort, and urban business markets in the United States. The company has a P/E ratio of 49.76.

The average volume for LaSalle Hotel Properties has been 852,800 shares per day over the past 30 days. LaSalle Hotel Properties has a market cap of $3.7 billion and is part of the real estate industry. Shares are up 15.4% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates LaSalle Hotel Properties as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, reasonable valuation levels, good cash flow from operations 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:
  • LHO's revenue growth has slightly outpaced the industry average of 10.3%. 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.
  • Compared to its closing price of one year ago, LHO's share price has jumped by 46.01%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, LHO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has slightly increased to $23.12 million or 3.80% when compared to the same quarter last year. Despite an increase in cash flow, LASALLE HOTEL PROPERTIES's cash flow growth rate is still lower than the industry average growth rate of 29.95%.
  • LASALLE HOTEL PROPERTIES's earnings per share declined by 12.5% 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, LASALLE HOTEL PROPERTIES increased its bottom line by earning $0.73 versus $0.52 in the prior year. This year, the market expects an improvement in earnings ($1.03 versus $0.73).

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

Ensco

Dividend Yield: 5.50%

Ensco (NYSE: ESV) shares currently have a dividend yield of 5.50%.

Ensco plc provides offshore contract drilling services to the oil and gas industry worldwide. The company operates through three segments: Floaters, Jackups, and Other. The company has a P/E ratio of 9.13.

The average volume for Ensco has been 2,828,200 shares per day over the past 30 days. Ensco has a market cap of $12.8 billion and is part of the energy industry. Shares are down 5.9% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates Ensco as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations, 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:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.0%. Since the same quarter one year prior, revenues slightly increased by 3.2%. 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.
  • 47.09% is the gross profit margin for ENSCO PLC which we consider to be strong. Regardless of ESV's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ESV's net profit margin of 24.64% significantly outperformed against the industry.
  • Net operating cash flow has increased to $416.60 million or 21.70% when compared to the same quarter last year. Despite an increase in cash flow, ENSCO PLC's cash flow growth rate is still lower than the industry average growth rate of 49.39%.
  • Despite currently having a low debt-to-equity ratio of 0.37, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.00 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 Energy Equipment & Services industry and the overall market, ENSCO PLC's return on equity is significantly below that of the industry average and is below 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.

W P Carey

Dividend Yield: 5.60%

W P Carey (NYSE: WPC) shares currently have a dividend yield of 5.60%.

W. P. Carey Inc. is an independent equity real estate investment trust. The firm also provides long-term sale-leaseback and build-to-suit financing for companies. It invests in the real estate markets across the globe. The company has a P/E ratio of 29.75.

The average volume for W P Carey has been 497,300 shares per day over the past 30 days. W P Carey has a market cap of $6.4 billion and is part of the real estate industry. Shares are up 4.1% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates W P Carey as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, good cash flow from operations, expanding profit margins and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • WPC's very impressive revenue growth greatly exceeded the industry average of 10.3%. Since the same quarter one year prior, revenues leaped by 97.3%. Growth in the company's revenue appears to have helped boost the 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 696.1% when compared to the same quarter one year prior, rising from $14.18 million to $112.89 million.
  • Net operating cash flow has significantly increased by 150.04% to $43.70 million when compared to the same quarter last year. In addition, W P CAREY INC has also vastly surpassed the industry average cash flow growth rate of 29.95%.
  • The gross profit margin for W P CAREY INC is currently very high, coming in at 74.09%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, WPC's net profit margin of 53.97% significantly outperformed against the industry.
  • W P CAREY INC reported significant earnings per share improvement 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, W P CAREY INC reported lower earnings of $1.20 versus $2.03 in the prior year. This year, the market expects an improvement in earnings ($2.14 versus $1.20).

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

Other helpful dividend tools from TheStreet:

null

More from Markets

Dow Falls, S&P 500 Trades Lower as P&G and Apple Slump

Dow Falls, S&P 500 Trades Lower as P&G and Apple Slump

Video: Jim Cramer on Apple, Procter & Gamble, Nucor and Acacia Communications

Video: Jim Cramer on Apple, Procter & Gamble, Nucor and Acacia Communications

Video: Jim Cramer Reveals Why Stocks Are Moving Lower Thursday

Video: Jim Cramer Reveals Why Stocks Are Moving Lower Thursday

Soaring Nickel Prices Could Be Bad News for Electric Carmakers Like Tesla

Soaring Nickel Prices Could Be Bad News for Electric Carmakers Like Tesla

Video: The Road to S&P 500 2,800 Is 'Slow and Choppy'

Video: The Road to S&P 500 2,800 Is 'Slow and Choppy'