3 Buy-Rated Dividend Stocks: ACC, BX, IRM

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."

American Campus Communities

Dividend Yield: 4.10%

American Campus Communities (NYSE: ACC) shares currently have a dividend yield of 4.10%.

American Campus Communities, Inc. is an independent equity real estate investment trust. The firm invests in the real estate markets of the United States. It primarily engages in developing, owning, and managing high-quality student housing communities. The company has a P/E ratio of 40.54.

The average volume for American Campus Communities has been 721,800 shares per day over the past 30 days. American Campus Communities has a market cap of $4.4 billion and is part of the real estate industry. Shares are down 4.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates American Campus Communities as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, increase in net income, revenue growth, notable return on equity and increase in stock price during the past year. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • AMERICAN CAMPUS COMMUNITIES 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. We feel that this trend should continue. During the past fiscal year, AMERICAN CAMPUS COMMUNITIES increased its bottom line by earning $0.55 versus $0.43 in the prior year. This year, the market expects an improvement in earnings ($0.69 versus $0.55).
  • 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 147.2% when compared to the same quarter one year prior, rising from $28.40 million to $70.20 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 5.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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, AMERICAN CAMPUS COMMUNITIES underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • In its most recent trading session, ACC 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. 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.

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Blackstone Group

Dividend Yield: 8.40%

Blackstone Group (NYSE: BX) shares currently have a dividend yield of 8.40%.

The Blackstone Group L.P. is a publicly owned investment manager. The firm also provides financial advisory services to its clients. It provides its services to public and corporate pension funds, academic, cultural, and charitable organizations. The company has a P/E ratio of 13.56.

The average volume for Blackstone Group has been 4,307,000 shares per day over the past 30 days. Blackstone Group has a market cap of $25.9 billion and is part of the financial services industry. Shares are up 25.9% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Blackstone Group as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. 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:
  • BX's very impressive revenue growth greatly exceeded the industry average of 5.4%. Since the same quarter one year prior, revenues leaped by 63.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for BLACKSTONE GROUP LP is rather high; currently it is at 55.18%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.24% is above that of the industry average.
  • Powered by its strong earnings growth of 127.27% and other important driving factors, this stock has surged by 47.76% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, BX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • BLACKSTONE GROUP LP 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, BLACKSTONE GROUP LP increased its bottom line by earning $2.59 versus $1.98 in the prior year. This year, the market expects an improvement in earnings ($4.10 versus $2.59).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 137.0% when compared to the same quarter one year prior, rising from $265.62 million to $629.45 million.

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Iron Mountain

Dividend Yield: 5.30%

Iron Mountain (NYSE: IRM) shares currently have a dividend yield of 5.30%.

Iron Mountain Incorporated, together with its subsidiaries, provides storage and information management services in North America, Europe, Latin America, and the Asia Pacific. The company has a P/E ratio of 21.38.

The average volume for Iron Mountain has been 1,656,700 shares per day over the past 30 days. Iron Mountain has a market cap of $7.6 billion and is part of the computer software & services industry. Shares are down 6.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Iron Mountain as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, notable return on equity and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, IRM's share price has jumped by 28.75%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, IRM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • 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, IRON MOUNTAIN INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for IRON MOUNTAIN INC is rather high; currently it is at 57.07%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, IRM's net profit margin of 5.48% significantly trails the industry average.
  • IRM, with its decline in revenue, underperformed when compared the industry average of 8.5%. Since the same quarter one year prior, revenues slightly dropped by 2.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • IRON MOUNTAIN INC's earnings per share declined by 13.6% 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, IRON MOUNTAIN INC increased its bottom line by earning $1.69 versus $0.52 in the prior year. For the next year, the market is expecting a contraction of 26.3% in earnings ($1.25 versus $1.69).

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