3 Buy-Rated Dividend Stocks To Check Out: LAMR, HCP, AEE

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."

Lamar Advertising

Dividend Yield: 4.60%

Lamar Advertising (NASDAQ: LAMR) shares currently have a dividend yield of 4.60%.

Lamar Advertising Company is a publicly owned equity real estate investment trust. The firm primarily engages in selling advertising space on billboards, buses, shelters, benches, and logo plates. Lamar Advertising Company was founded in 1902 and is headquartered in Baton Rouge, Louisiana. The company has a P/E ratio of 18.93.

The average volume for Lamar Advertising has been 750,700 shares per day over the past 30 days. Lamar Advertising has a market cap of $4.8 billion and is part of the real estate industry. Shares are up 10.5% 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 compelling growth in net income, revenue growth, notable return on equity, solid stock price performance and impressive record of earnings per share growth. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

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 941.8% when compared to the same quarter one year prior, rising from -$4.84 million to $40.72 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.5%. Since the same quarter one year prior, revenues slightly increased by 6.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, LAMAR ADVERTISING CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 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. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • LAMAR ADVERTISING CO 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, LAMAR ADVERTISING CO increased its bottom line by earning $2.66 versus $0.42 in the prior year. For the next year, the market is expecting a contraction of 3.0% in earnings ($2.58 versus $2.66).

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HCP

Dividend Yield: 5.80%

HCP (NYSE: HCP) shares currently have a dividend yield of 5.80%.

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 42.58.

The average volume for HCP has been 3,560,100 shares per day over the past 30 days. HCP has a market cap of $18.1 billion and is part of the real estate industry. Shares are down 11% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates HCP as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • HCP's revenue growth has slightly outpaced the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 14.7%. 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.
  • HCP INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, HCP INC reported lower earnings of $1.95 versus $1.97 in the prior year. This year, the market expects an improvement in earnings ($1.99 versus $1.95).
  • The gross profit margin for HCP INC is rather high; currently it is at 56.55%. 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 -38.53% significantly underperformed when compared to the industry average.
  • Net operating cash flow has declined marginally to $230.07 million or 6.92% when compared to the same quarter last year. Despite a decrease in cash flow HCP INC is still fairing well by exceeding its industry average cash flow growth rate of -51.19%.
  • The share price of HCP INC has not done very well: it is down 7.59% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Despite the stock's decline during the last year, it is still somewhat more expensive (in proportion to its earnings over the last year) than most other stocks in its industry. We feel, however, that other strengths this company displays offset this slight negative.

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Ameren

Dividend Yield: 4.10%

Ameren (NYSE: AEE) shares currently have a dividend yield of 4.10%.

Ameren Corporation operates as a public utility holding company in the United States. The company engages in the rate-regulated electric generation, transmission, and distribution; and rate-regulated natural gas transmission and distribution businesses. The company has a P/E ratio of 16.45.

The average volume for Ameren has been 1,756,900 shares per day over the past 30 days. Ameren has a market cap of $9.8 billion and is part of the utilities industry. Shares are down 12.6% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Ameren as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, reasonable valuation levels, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • AMEREN CORP has improved earnings per share by 12.5% 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, AMEREN CORP increased its bottom line by earning $2.41 versus $2.10 in the prior year. This year, the market expects an improvement in earnings ($2.55 versus $2.41).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Multi-Utilities industry average. The net income increased by 12.5% when compared to the same quarter one year prior, going from $96.00 million to $108.00 million.
  • Net operating cash flow has increased to $298.00 million or 24.68% when compared to the same quarter last year. Despite an increase in cash flow, AMEREN CORP's average is still marginally south of the industry average growth rate of 31.39%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.3%. Since the same quarter one year prior, revenues slightly dropped by 2.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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