Buy-Rated Dividend Stocks: Top 3 Companies: ED, ARI, ROIC

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."

Consolidated Edison

Dividend Yield: 4.40%

Consolidated Edison (NYSE: ED) shares currently have a dividend yield of 4.40%.

Consolidated Edison, Inc. is engaged in regulated electric, gas, and steam delivery businesses in the United States. The company has a P/E ratio of 13.44.

The average volume for Consolidated Edison has been 2,105,200 shares per day over the past 30 days. Consolidated Edison has a market cap of $16.6 billion and is part of the utilities industry. Shares are up 1.9% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Consolidated Edison as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, attractive valuation levels, good cash flow from operations 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:
  • The revenue growth came in higher than the industry average of 7.8%. Since the same quarter one year prior, revenues rose by 19.0%. 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 Multi-Utilities industry. The net income increased by 88.0% when compared to the same quarter one year prior, rising from $192.00 million to $361.00 million.
  • Net operating cash flow has significantly increased by 366.66% to $224.00 million when compared to the same quarter last year. In addition, CONSOLIDATED EDISON INC has also vastly surpassed the industry average cash flow growth rate of 8.13%.
  • 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 Multi-Utilities industry and the overall market on the basis of return on equity, CONSOLIDATED EDISON INC has outperformed in comparison with the industry average, but 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.

Apollo Commercial Real Estate Finance

Dividend Yield: 9.60%

Apollo Commercial Real Estate Finance (NYSE: ARI) shares currently have a dividend yield of 9.60%.

Apollo Commercial Real Estate Finance, Inc. The company has a P/E ratio of 12.26.

The average volume for Apollo Commercial Real Estate Finance has been 547,100 shares per day over the past 30 days. Apollo Commercial Real Estate Finance has a market cap of $765.4 million and is part of the real estate industry. Shares are up 1.9% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Apollo Commercial Real Estate Finance as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, expanding profit margins, compelling growth in net income and growth in earnings per share. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • ARI's revenue growth has slightly outpaced the industry average of 10.3%. Since the same quarter one year prior, revenues rose by 16.7%. 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 APOLLO COMMERCIAL RE FIN INC is currently very high, coming in at 81.06%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 83.08% significantly outperformed against the industry average.
  • 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 47.3% when compared to the same quarter one year prior, rising from $11.93 million to $17.58 million.
  • APOLLO COMMERCIAL RE FIN INC has improved earnings per share by 27.3% 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, APOLLO COMMERCIAL RE FIN INC reported lower earnings of $1.26 versus $1.68 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $1.26).

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

Retail Opportunity Investments

Dividend Yield: 4.10%

Retail Opportunity Investments (NASDAQ: ROIC) shares currently have a dividend yield of 4.10%.

Retail Opportunity Investments Corp., a real estate investment trust (REIT), engages in the acquisition, ownership, and management of necessity-based community and neighborhood shopping centers in the eastern and western regions of the United States. The company has a P/E ratio of 32.24.

The average volume for Retail Opportunity Investments has been 961,100 shares per day over the past 30 days. Retail Opportunity Investments has a market cap of $1.2 billion and is part of the real estate industry. Shares are up 8.8% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Retail Opportunity Investments 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, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 10.3%. Since the same quarter one year prior, revenues rose by 47.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant 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 36.8% when compared to the same quarter one year prior, rising from $2.29 million to $3.13 million.
  • Net operating cash flow has significantly increased by 268.61% to $16.27 million when compared to the same quarter last year. In addition, RETAIL OPPORTUNITY INVTS CP has also vastly surpassed the industry average cash flow growth rate of 29.73%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
  • RETAIL OPPORTUNITY INVTS CP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, RETAIL OPPORTUNITY INVTS CP increased its bottom line by earning $0.47 versus $0.15 in the prior year. For the next year, the market is expecting a contraction of 59.6% in earnings ($0.19 versus $0.47).

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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