Don't Miss Out: Top 3 Yielding Buy-Rated Stocks: STWD, HLSS, EPR

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."

Starwood Property

Dividend Yield: 8.10%

Starwood Property (NYSE: STWD) shares currently have a dividend yield of 8.10%.

Starwood Property Trust, Inc. originates, acquires, finances, and manages commercial mortgage loans, other commercial real estate debt investments, commercial mortgage-backed securities, and other commercial real estate-related debt investments in the United States and Europe. The company has a P/E ratio of 11.40.

The average volume for Starwood Property has been 1,890,200 shares per day over the past 30 days. Starwood Property has a market cap of $5.3 billion and is part of the real estate industry. Shares are down 14.7% year-to-date as of the close of trading on Monday.

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, attractive valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • STWD's very impressive revenue growth greatly exceeded the industry average of 10.5%. Since the same quarter one year prior, revenues leaped by 103.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • STARWOOD PROPERTY TRUST INC has improved earnings per share by 29.8% 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 $1.83 versus $1.78 in the prior year. This year, the market expects an improvement in earnings ($2.17 versus $1.83).
  • 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 93.8% when compared to the same quarter one year prior, rising from $62.24 million to $120.60 million.
  • Net operating cash flow has increased to $104.32 million or 22.94% when compared to the same quarter last year. In addition, STARWOOD PROPERTY TRUST INC has also vastly surpassed the industry average cash flow growth rate of -42.37%.

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

Home Loan Servicing Solutions

Dividend Yield: 9.00%

Home Loan Servicing Solutions (NASDAQ: HLSS) shares currently have a dividend yield of 9.00%.

Home Loan Servicing Solutions, Ltd., through its subsidiaries, engages in the acquisition of mortgage servicing assets. Its mortgage servicing assets consists of servicing advances, mortgage servicing rights, rights to mortgage servicing rights, and other related assets. The company has a P/E ratio of 8.67.

The average volume for Home Loan Servicing Solutions has been 581,100 shares per day over the past 30 days. Home Loan Servicing Solutions has a market cap of $1.5 billion and is part of the real estate industry. Shares are down 7.5% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates Home Loan Servicing Solutions as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, 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:
  • HLSS's very impressive revenue growth greatly exceeded the industry average of 32.9%. Since the same quarter one year prior, revenues leaped by 95.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • HOME LOAN SERVICING SOLTNS 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, HOME LOAN SERVICING SOLTNS increased its bottom line by earning $1.97 versus $1.23 in the prior year. This year, the market expects an improvement in earnings ($2.53 versus $1.97).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Thrifts & Mortgage Finance industry. The net income increased by 93.8% when compared to the same quarter one year prior, rising from $27.89 million to $54.06 million.
  • The gross profit margin for HOME LOAN SERVICING SOLTNS is currently very high, coming in at 95.46%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 54.86% significantly outperformed against the industry average.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market on the basis of return on equity, HOME LOAN SERVICING SOLTNS 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.

EPR Properties

Dividend Yield: 6.30%

EPR Properties (NYSE: EPR) shares currently have a dividend yield of 6.30%.

EPR Properties, a real estate investment trust (REIT), develops, owns, leases, and finances entertainment and related properties in the United States and Canada. Its properties include megaplex theatres, entertainment retail centers, and destination recreational and specialty properties. The company has a P/E ratio of 17.22.

The average volume for EPR Properties has been 323,400 shares per day over the past 30 days. EPR Properties has a market cap of $2.9 billion and is part of the real estate industry. Shares are up 11% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates EPR Properties as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, expanding profit margins, good cash flow from operations and impressive record of earnings per share growth. 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:
  • 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 25.5% when compared to the same quarter one year prior, rising from $32.48 million to $40.76 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.5%. Since the same quarter one year prior, revenues rose by 10.3%. 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 EPR PROPERTIES is rather high; currently it is at 67.85%. Regardless of EPR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EPR's net profit margin of 44.27% significantly outperformed against the industry.
  • Net operating cash flow has remained constant at $72.82 million with no significant change when compared to the same quarter last year. Along with maintaining stable cash flow from operations, the firm exceeded the industry average cash flow growth rate of -42.37%.
  • EPR PROPERTIES has improved earnings per share by 18.2% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, EPR PROPERTIES increased its bottom line by earning $3.13 versus $2.41 in the prior year. For the next year, the market is expecting a contraction of 8.6% in earnings ($2.86 versus $3.13).

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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