3 Buy-Rated Dividend Stocks: LAMR, PAA, CHSP

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."

Lamar Advertising

Dividend Yield: 6.50%

Lamar Advertising (NASDAQ: LAMR) shares currently have a dividend yield of 6.50%.

Lamar Advertising Company operates as an outdoor advertising company in the United States. The company has a P/E ratio of 128.00.

The average volume for Lamar Advertising has been 1,246,300 shares per day over the past 30 days. Lamar Advertising has a market cap of $4.1 billion and is part of the media industry. Shares are down 1.9% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Lamar Advertising as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins, solid stock price performance 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:
  • LAMR's revenue growth trails the industry average of 12.3%. Since the same quarter one year prior, revenues slightly increased by 0.8%. 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.
  • LAMAR ADVERTISING CO's earnings per share declined by 33.3% 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, LAMAR ADVERTISING CO increased its bottom line by earning $0.42 versus $0.10 in the prior year. This year, the market expects an improvement in earnings ($0.86 versus $0.42).
  • Net operating cash flow has increased to $110.85 million or 10.59% when compared to the same quarter last year. Despite an increase in cash flow, LAMAR ADVERTISING CO's average is still marginally south of the industry average growth rate of 14.05%.
  • The gross profit margin for LAMAR ADVERTISING CO is rather high; currently it is at 65.42%. Regardless of LAMR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.66% trails the industry average.
  • 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. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

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

Plains All American Pipeline

Dividend Yield: 4.50%

Plains All American Pipeline (NYSE: PAA) shares currently have a dividend yield of 4.50%.

Plains All American Pipeline, L.P., together with its subsidiaries, is engaged in transporting, storing, terminalling, and marketing crude oil, natural gas liquids (NGL), natural gas, and refined products in the United States and Canada. The company has a P/E ratio of 26.97.

The average volume for Plains All American Pipeline has been 777,200 shares per day over the past 30 days. Plains All American Pipeline has a market cap of $21.3 billion and is part of the energy industry. Shares are up 12.6% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Plains All American Pipeline as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 8.7%. 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 where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • PLAINS ALL AMER PIPELNE -LP's earnings per share declined by 21.1% in the most recent quarter compared to the same quarter a year ago. 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, PLAINS ALL AMER PIPELNE -LP increased its bottom line by earning $2.80 versus $2.40 in the prior year. For the next year, the market is expecting a contraction of 12.5% in earnings ($2.45 versus $2.80).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, PLAINS ALL AMER PIPELNE -LP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The gross profit margin for PLAINS ALL AMER PIPELNE -LP is currently extremely low, coming in at 4.95%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.56% trails that of 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.

Chesapeake Lodging

Dividend Yield: 4.10%

Chesapeake Lodging (NYSE: CHSP) shares currently have a dividend yield of 4.10%.

Chesapeake Lodging Trust is a self-advised real estate investment trust organized in the state of Maryland in June 2009. The company focuses on investments primarily in upper-upscale hotels in major business and convention markets and premium select-service hotels in urban settings or unique locations in the United States. The company has a P/E ratio of 31.97.

The average volume for Chesapeake Lodging has been 395,300 shares per day over the past 30 days. Chesapeake Lodging has a market cap of $1.5 billion and is part of the real estate industry. Shares are up 16.6% year-to-date as of the close of trading on Tuesday.

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

TheStreet Ratings rates Chesapeake Lodging as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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.
  • CHESAPEAKE LODGING TRUST has improved earnings per share by 26.7% 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, CHESAPEAKE LODGING TRUST increased its bottom line by earning $0.72 versus $0.65 in the prior year. This year, the market expects an improvement in earnings ($0.90 versus $0.72).
  • 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 24.6% when compared to the same quarter one year prior, going from $17.06 million to $21.25 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.6%. Since the same quarter one year prior, revenues rose by 11.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

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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