3 Buy-Rated Dividend Stocks Taking The Lead: EPR, SBRA, HPT

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."

EPR Properties

Dividend Yield: 6.10%

EPR Properties (NYSE: EPR) shares currently have a dividend yield of 6.10%.

EPR Properties is a real estate investment trust. It invests in the real estate markets of United States and Canada. The firm develops, owns, leases and finances properties in select market segments primarily related to entertainment, education and recreation. The company has a P/E ratio of 21.37.

The average volume for EPR Properties has been 295,400 shares per day over the past 30 days. EPR Properties has a market cap of $3.4 billion and is part of the real estate industry. Shares are up 2.8% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates EPR Properties 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 and increase in stock price during the past year. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • EPR's revenue growth has slightly outpaced the industry average of 8.4%. Since the same quarter one year prior, revenues rose by 10.5%. 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.
  • Net operating cash flow has increased to $57.52 million or 38.49% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -0.03%.
  • The gross profit margin for EPR PROPERTIES is rather high; currently it is at 64.76%. Regardless of EPR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EPR's net profit margin of 42.98% significantly outperformed against the industry.
  • 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.
  • EPR PROPERTIES' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, EPR PROPERTIES reported lower earnings of $2.78 versus $3.13 in the prior year. This year, the market expects an improvement in earnings ($2.82 versus $2.78).

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Sabra Health Care REIT

Dividend Yield: 5.70%

Sabra Health Care REIT (NASDAQ: SBRA) shares currently have a dividend yield of 5.70%.

Sabra Health Care REIT, Inc. operates as a real estate investment trust in the United States. The company, through its subsidiaries, owns and invests in real estate properties for the healthcare industry. The company has a P/E ratio of 20.95.

The average volume for Sabra Health Care REIT has been 401,100 shares per day over the past 30 days. Sabra Health Care REIT has a market cap of $1.6 billion and is part of the real estate industry. Shares are down 9.6% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Sabra Health Care REIT as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations 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:
  • The revenue growth came in higher than the industry average of 8.4%. Since the same quarter one year prior, revenues rose by 36.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SABRA HEALTH CARE REIT INC 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, SABRA HEALTH CARE REIT INC increased its bottom line by earning $0.69 versus $0.67 in the prior year. This year, the market expects an improvement in earnings ($1.22 versus $0.69).
  • 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 366.3% when compared to the same quarter one year prior, rising from -$7.30 million to $19.45 million.
  • Net operating cash flow has significantly increased by 1946.47% to $24.70 million when compared to the same quarter last year. In addition, SABRA HEALTH CARE REIT INC has also vastly surpassed the industry average cash flow growth rate of -0.03%.
  • The gross profit margin for SABRA HEALTH CARE REIT INC is rather high; currently it is at 60.14%. Regardless of SBRA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SBRA's net profit margin of 34.99% compares favorably to the industry average.

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Hospitality Properties

Dividend Yield: 6.50%

Hospitality Properties (NYSE: HPT) shares currently have a dividend yield of 6.50%.

Hospitality Properties Trust, a real estate investment trust (REIT), engages in buying, owning, and leasing hotels. The company has a P/E ratio of 25.51.

The average volume for Hospitality Properties has been 706,300 shares per day over the past 30 days. Hospitality Properties has a market cap of $4.6 billion and is part of the real estate industry. Shares are down 0.3% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Hospitality Properties as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, reasonable valuation levels 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:
  • HPT's revenue growth has slightly outpaced the industry average of 8.4%. Since the same quarter one year prior, revenues rose by 10.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HOSPITALITY PROPERTIES TRUST has improved earnings per share by 9.1% 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, HOSPITALITY PROPERTIES TRUST increased its bottom line by earning $1.18 versus $0.73 in the prior year. This year, the market expects an improvement in earnings ($1.42 versus $1.18).
  • 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 Real Estate Investment Trusts (REITs) industry average. The net income increased by 10.7% when compared to the same quarter one year prior, going from $37.55 million to $41.58 million.
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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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