Buy-Rated Dividend Stocks: Top 3 Companies: HCP, BX, TOT

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."

HCP

Dividend Yield: 5.10%

HCP (NYSE: HCP) shares currently have a dividend yield of 5.10%.

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 21.64.

The average volume for HCP has been 2,207,600 shares per day over the past 30 days. HCP has a market cap of $19.5 billion and is part of the real estate industry. Shares are up 17% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates HCP as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, 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 lackluster performance in the stock itself.

Highlights from the ratings report include:
  • 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 12.4% when compared to the same quarter one year prior, going from $230.59 million to $259.11 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.1%. Since the same quarter one year prior, revenues slightly increased by 3.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Net operating cash flow has increased to $247.18 million or 15.31% when compared to the same quarter last year. In addition, HCP INC has also vastly surpassed the industry average cash flow growth rate of -37.20%.
  • HCP INC reported flat earnings per share in the most recent quarter. 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, HCP INC increased its bottom line by earning $1.96 versus $1.80 in the prior year. This year, the market expects an improvement in earnings ($2.05 versus $1.96).
  • The gross profit margin for HCP INC is rather high; currently it is at 62.45%. 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 47.58% 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.

Blackstone Group

Dividend Yield: 6.40%

Blackstone Group (NYSE: BX) shares currently have a dividend yield of 6.40%.

The Blackstone Group L.P. is a publicly owned investment manager. The firm also provides financial advisory services to its clients. It provides its services to public and corporate pension funds, academic, cultural, and charitable organizations. The company has a P/E ratio of 16.12.

The average volume for Blackstone Group has been 4,827,000 shares per day over the past 30 days. Blackstone Group has a market cap of $17.6 billion and is part of the financial services industry. Shares are up 8.5% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Blackstone Group as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • BX's very impressive revenue growth greatly exceeded the industry average of 0.5%. Since the same quarter one year prior, revenues leaped by 56.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for BLACKSTONE GROUP LP is rather high; currently it is at 53.06%. It has increased significantly from the same period last year. Along with this, the net profit margin of 22.89% is above that of the industry average.
  • Powered by its strong earnings growth of 136.11% and other important driving factors, this stock has surged by 47.41% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • BLACKSTONE GROUP 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, BLACKSTONE GROUP LP increased its bottom line by earning $1.98 versus $0.40 in the prior year. This year, the market expects an improvement in earnings ($3.74 versus $1.98).
  • 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 144.8% when compared to the same quarter one year prior, rising from $211.15 million to $517.02 million.

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

Total

Dividend Yield: 4.80%

Total (NYSE: TOT) shares currently have a dividend yield of 4.80%.

TOTAL S.A., together with its subsidiaries, operates as an oil and gas company worldwide. The company operates in three segments: Upstream, Refining & Chemicals, and Marketing & Services. The company has a P/E ratio of 7.16.

The average volume for Total has been 929,800 shares per day over the past 30 days. Total has a market cap of $157.3 billion and is part of the energy industry. Shares are up 13.3% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Total as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income, attractive valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. 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 67.81% and other important driving factors, this stock has surged by 31.67% 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, TOT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 69.3% when compared to the same quarter one year prior, rising from $1,969.82 million to $3,335.00 million.
  • The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.78 is somewhat weak and could be cause for future problems.
  • TOTAL SA 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, TOTAL SA reported lower earnings of $5.12 versus $6.17 in the prior year. This year, the market expects an improvement in earnings ($6.08 versus $5.12).

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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