3 Buy-Rated Dividend Stocks: SFUN, OHI, PCL

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."

SouFun Holdings

Dividend Yield: 19.80%

SouFun Holdings (NYSE: SFUN) shares currently have a dividend yield of 19.80%.

SouFun Holdings Limited operates a real estate Internet portal, and a home furnishing and an improvement Website in the People's Republic of China. The company has a P/E ratio of 13.65.

The average volume for SouFun Holdings has been 7,226,200 shares per day over the past 30 days. SouFun Holdings has a market cap of $4.1 billion and is part of the internet industry. Shares are down 41.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates SouFun Holdings as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, robust revenue growth, expanding profit margins, growth in earnings per share 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 greatly exceeded that of the S&P 500, but is less than that of the Internet Software & Services industry average. The net income increased by 23.2% when compared to the same quarter one year prior, going from $55.37 million to $68.20 million.
  • SFUN's revenue growth trails the industry average of 43.9%. Since the same quarter one year prior, revenues rose by 16.6%. 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 SOUFUN HLDGS LTD is currently very high, coming in at 84.28%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 40.55% significantly outperformed against the industry average.
  • SOUFUN HLDGS LTD has improved earnings per share by 11.9% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, SOUFUN HLDGS LTD increased its bottom line by earning $0.71 versus $0.37 in the prior year. For the next year, the market is expecting a contraction of 8.2% in earnings ($0.65 versus $0.71).
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet Software & Services industry and the overall market, SOUFUN HLDGS LTD's return on equity significantly exceeds that of both the industry average and 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.

Omega Healthcare Investors

Dividend Yield: 6.00%

Omega Healthcare Investors (NYSE: OHI) shares currently have a dividend yield of 6.00%.

Omega Healthcare Investors, Inc. is a real estate investment firm. The firm invests in the real estate markets of United States. It invests in healthcare facilities, primarily in long-term healthcare facilities in order to create its portfolio. Omega Healthcare Investors, Inc. The company has a P/E ratio of 22.57.

The average volume for Omega Healthcare Investors has been 1,089,800 shares per day over the past 30 days. Omega Healthcare Investors has a market cap of $4.3 billion and is part of the real estate industry. Shares are up 14.2% year-to-date as of the close of trading on Thursday.

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 Omega Healthcare Investors as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, good cash flow from operations, notable return on equity 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:
  • OHI's revenue growth has slightly outpaced the industry average of 11.6%. Since the same quarter one year prior, revenues rose by 18.8%. 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.
  • The gross profit margin for OMEGA HEALTHCARE INVS INC is rather high; currently it is at 65.55%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 38.43% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $88.70 million or 39.18% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 18.92%.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, OMEGA HEALTHCARE INVS INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • 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.

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

Plum Creek Timber

Dividend Yield: 4.50%

Plum Creek Timber (NYSE: PCL) shares currently have a dividend yield of 4.50%.

Plum Creek Timber Company, Inc. is a publicly owned real estate investment trust (REIT). The trust owns and manages timberlands in the United States. Its products include lumber products, plywood, medium density fiberboard, and related by-products, such as wood chips. The company has a P/E ratio of 34.29.

The average volume for Plum Creek Timber has been 1,006,700 shares per day over the past 30 days. Plum Creek Timber has a market cap of $7.0 billion and is part of the materials & construction industry. Shares are down 16% year-to-date as of the close of trading on Thursday.

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 Plum Creek Timber as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, expanding profit margins 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:
  • PCL's revenue growth has slightly outpaced the industry average of 11.6%. Since the same quarter one year prior, revenues rose by 17.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income increased by 19.6% when compared to the same quarter one year prior, going from $46.00 million to $55.00 million.
  • 40.17% is the gross profit margin for PLUM CREEK TIMBER CO INC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, PCL's net profit margin of 15.44% significantly trails the industry average.
  • PLUM CREEK TIMBER CO INC has improved earnings per share by 10.7% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, PLUM CREEK TIMBER CO INC increased its bottom line by earning $1.31 versus $1.25 in the prior year. For the next year, the market is expecting a contraction of 12.2% in earnings ($1.15 versus $1.31).
  • PCL has underperformed the S&P 500 Index, declining 16.68% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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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