Buy-Rated Dividend Stocks: Top 3 Companies: STWD, VLY, BPL

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."

Starwood Property

Dividend Yield: 8.40%

Starwood Property (NYSE: STWD) shares currently have a dividend yield of 8.40%.

Starwood Property Trust, Inc. originates, acquires, finances, and manages commercial mortgage loans, other commercial real estate debt investments, commercial mortgage-backed securities, and other commercial real estate-related debt investments in the United States and Europe. The company has a P/E ratio of 10.59.

The average volume for Starwood Property has been 2,682,400 shares per day over the past 30 days. Starwood Property has a market cap of $5.4 billion and is part of the real estate industry. Shares are down 0.7% year-to-date as of the close of trading on Wednesday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreet Ratings rates Starwood Property as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, expanding profit margins, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • 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 7.5%. 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.
  • The gross profit margin for STARWOOD PROPERTY TRUST INC is rather high; currently it is at 61.67%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 65.08% significantly outperformed against the industry average.
  • Net operating cash flow has slightly increased to $114.15 million or 9.41% when compared to the same quarter last year. In addition, STARWOOD PROPERTY TRUST INC has also modestly surpassed the industry average cash flow growth rate of 0.76%.
  • 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, STARWOOD PROPERTY TRUST INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

Valley National Bancorp

Dividend Yield: 4.40%

Valley National Bancorp (NYSE: VLY) shares currently have a dividend yield of 4.40%.

Valley National Bancorp operates as the holding company for the Valley National Bank that provides commercial, retail, insurance, and wealth management financial services products. The company operates through Commercial Lending, Consumer Lending, and Investment Management segments. The company has a P/E ratio of 19.38.

The average volume for Valley National Bancorp has been 1,414,500 shares per day over the past 30 days. Valley National Bancorp has a market cap of $2.3 billion and is part of the banking industry. Shares are up 5.2% year-to-date as of the close of trading on Wednesday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreet Ratings rates Valley National Bancorp as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, 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:
  • VLY's revenue growth has slightly outpaced the industry average of 0.2%. Since the same quarter one year prior, revenues slightly increased by 9.9%. 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 significantly increased by 53.03% to $53.87 million when compared to the same quarter last year. In addition, VALLEY NATIONAL BANCORP has also vastly surpassed the industry average cash flow growth rate of -37.32%.
  • The gross profit margin for VALLEY NATIONAL BANCORP is currently very high, coming in at 79.49%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, VLY's net profit margin of 16.00% significantly trails the industry average.
  • VALLEY NATIONAL BANCORP's earnings per share declined by 23.5% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, VALLEY NATIONAL BANCORP reported lower earnings of $0.57 versus $0.67 in the prior year. This year, the market expects an improvement in earnings ($0.59 versus $0.57).
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Commercial Banks industry average. The net income has decreased by 10.3% when compared to the same quarter one year ago, dropping from $33.84 million to $30.34 million.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

Buckeye Partners

Dividend Yield: 6.00%

Buckeye Partners (NYSE: BPL) shares currently have a dividend yield of 6.00%.

Buckeye Partners, L.P. owns and operates liquid petroleum products pipeline systems in the United States. The company operates through four segments: Pipelines & Terminals, Global Marine Terminals, Merchant Services, and Development & Logistics. The company has a P/E ratio of 27.61.

The average volume for Buckeye Partners has been 370,400 shares per day over the past 30 days. Buckeye Partners has a market cap of $9.8 billion and is part of the energy industry. Shares are up 2.1% year-to-date as of the close of trading on Wednesday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreet Ratings rates Buckeye Partners as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, reasonable valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 23.4% when compared to the same quarter one year prior, going from $90.47 million to $111.61 million.
  • Net operating cash flow has significantly increased by 599.01% to $237.62 million when compared to the same quarter last year. In addition, BUCKEYE PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -53.19%.
  • The debt-to-equity ratio is somewhat low, currently at 0.98, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that BPL's debt-to-equity ratio is low, the quick ratio, which is currently 0.57, displays a potential problem in covering short-term cash needs.
  • BUCKEYE PARTNERS LP's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BUCKEYE PARTNERS LP reported lower earnings of $2.79 versus $3.23 in the prior year. This year, the market expects an improvement in earnings ($3.70 versus $2.79).

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

Other helpful dividend tools from TheStreet:

More from Markets

Dow Plunges on Trade War Worries but Walmart and Verizon Finish Positively

Dow Plunges on Trade War Worries but Walmart and Verizon Finish Positively

Tuesday Turnaround in Politics: Is a Trade War on the Horizon?

Tuesday Turnaround in Politics: Is a Trade War on the Horizon?

FANG Stocks Get Swept Up in Broader Market Selloff

FANG Stocks Get Swept Up in Broader Market Selloff

Snap Shares Plunge After Cowen Cuts Price Target

Snap Shares Plunge After Cowen Cuts Price Target

Netflix Shares Hit All-Time High as Market Flounders

Netflix Shares Hit All-Time High as Market Flounders