3 Buy-Rated Dividend Stocks: LHO, SCG, PPL

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

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."

LaSalle Hotel Properties

Dividend Yield: 5.10%

LaSalle Hotel Properties (NYSE: LHO) shares currently have a dividend yield of 5.10%.

LaSalle Hotel Properties, a real estate investment trust (REIT), engages in the purchase, ownership, redevelopment, and leasing of primarily upscale and luxury full-service hotels in convention, resort, and urban business markets in the United States. The company has a P/E ratio of 17.96.

The average volume for LaSalle Hotel Properties has been 1,084,900 shares per day over the past 30 days. LaSalle Hotel Properties has a market cap of $4.0 billion and is part of the real estate industry. Shares are down 12.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates LaSalle Hotel Properties as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, reasonable valuation levels, good cash flow from operations and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • LHO's revenue growth has slightly outpaced the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 13.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
  • 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 156.0% when compared to the same quarter one year prior, rising from -$4.87 million to $2.72 million.
  • Net operating cash flow has significantly increased by 126.11% to $52.28 million when compared to the same quarter last year. In addition, LASALLE HOTEL PROPERTIES has also vastly surpassed the industry average cash flow growth rate of -62.88%.

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SCANA

Dividend Yield: 4.20%

SCANA (NYSE: SCG) shares currently have a dividend yield of 4.20%.

SCANA Corporation, through its subsidiaries, engages in the generation, transmission, distribution, and sale of electricity to retail and wholesale customers in South Carolina. It owns nuclear, coal, hydro, natural gas and oil, and biomass generating facilities. The company has a P/E ratio of 13.81.

The average volume for SCANA has been 1,010,700 shares per day over the past 30 days. SCANA has a market cap of $7.5 billion and is part of the utilities industry. Shares are down 13.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates SCANA as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, impressive record of earnings per share growth and expanding profit margins. 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 significantly exceeded that of the S&P 500 and the Multi-Utilities industry. The net income increased by 107.3% when compared to the same quarter one year prior, rising from $193.00 million to $400.00 million.
  • SCANA CORP 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, SCANA CORP increased its bottom line by earning $3.79 versus $3.38 in the prior year. For the next year, the market is expecting a contraction of 2.4% in earnings ($3.70 versus $3.79).
  • SCG, with its decline in revenue, slightly underperformed the industry average of 5.0%. Since the same quarter one year prior, revenues fell by 12.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for SCANA CORP is currently lower than what is desirable, coming in at 32.18%. Regardless of SCG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SCG's net profit margin of 28.79% significantly outperformed against the industry.
  • In its most recent trading session, SCG has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.

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PPL

Dividend Yield: 4.50%

PPL (NYSE: PPL) shares currently have a dividend yield of 4.50%.

PPL Corporation, an energy and utility holding company, generates, transmits, distributes, and sells electricity to wholesale and retail customers in the United States and the United Kingdom. It operates in four segments: U.K. Regulated; Kentucky Regulated; Pennsylvania Regulated; and Supply. The company has a P/E ratio of 14.03.

The average volume for PPL has been 4,846,500 shares per day over the past 30 days. PPL has a market cap of $22.3 billion and is part of the utilities industry. Shares are down 8.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates PPL as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, good cash flow from operations, notable return on equity and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 42.7%. 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 Electric Utilities industry. The net income increased by 809.2% when compared to the same quarter one year prior, rising from -$98.00 million to $695.00 million.
  • Net operating cash flow has increased to $775.00 million or 22.23% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -0.87%.
  • 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 Electric Utilities industry and the overall market on the basis of return on equity, PPL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • PPL CORP 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, PPL CORP increased its bottom line by earning $2.38 versus $1.69 in the prior year. For the next year, the market is expecting a contraction of 5.5% in earnings ($2.25 versus $2.38).

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