Buy-Rated Dividend Stocks: Top 3 Companies: MFC, CHSP, DHT

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."

Manulife Financial

Dividend Yield: 4.30%

Manulife Financial (NYSE: MFC) shares currently have a dividend yield of 4.30%.

Manulife Financial Corporation, together with its subsidiaries, provides financial advice, insurance, and wealth and asset management solutions for individuals, groups, and institutions in Asia, Canada, and the United States. The company has a P/E ratio of 14.45.

The average volume for Manulife Financial has been 2,306,800 shares per day over the past 30 days. Manulife Financial has a market cap of $26.5 billion and is part of the insurance industry. Shares are down 8.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Manulife Financial as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations and increase in net income. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 15.6%. Since the same quarter one year prior, revenues rose by 38.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although MFC's debt-to-equity ratio of 0.29 is very low, it is currently higher than that of the industry average.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Insurance industry. The net income increased by 44.5% when compared to the same quarter one year prior, rising from $723.00 million to $1,045.00 million.
  • Net operating cash flow has increased to $2,701.00 million or 30.73% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -16.84%.

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Chesapeake Lodging

Dividend Yield: 6.80%

Chesapeake Lodging (NYSE: CHSP) shares currently have a dividend yield of 6.80%.

Chesapeake Lodging Trust is a self-advised real estate investment trust organized in the state of Maryland in June 2009. The company focuses on investments primarily in upper-upscale hotels in major business and convention markets and premium select-service hotels in urban settings or unique locations in the United States. The company has a P/E ratio of 20.37.

The average volume for Chesapeake Lodging has been 356,100 shares per day over the past 30 days. Chesapeake Lodging has a market cap of $1.4 billion and is part of the real estate industry. Shares are down 7.6% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Chesapeake Lodging as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, reasonable valuation levels, good cash flow from operations and growth in earnings per share. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 12.0%. Since the same quarter one year prior, revenues rose by 28.6%. 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 Real Estate Investment Trusts (REITs) industry. The net income increased by 548.8% when compared to the same quarter one year prior, rising from $1.55 million to $10.07 million.
  • Net operating cash flow has significantly increased by 285.43% to $25.07 million when compared to the same quarter last year. In addition, CHESAPEAKE LODGING TRUST has also vastly surpassed the industry average cash flow growth rate of 11.45%.
  • CHESAPEAKE LODGING TRUST reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. 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, CHESAPEAKE LODGING TRUST reported lower earnings of $0.97 versus $1.01 in the prior year. This year, the market expects an improvement in earnings ($1.34 versus $0.97).

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DHT Holdings

Dividend Yield: 19.80%

DHT Holdings (NYSE: DHT) shares currently have a dividend yield of 19.80%.

DHT Holdings, Inc., together with its subsidiaries, owns and operates crude oil tankers in Bermuda. As of March 16, 2016, its fleet consisted of 20 crude oil tankers, including 17 very large crude carriers (VLCC), 1 Suezmax tanker, and 2 Aframax tankers. The company has a P/E ratio of 4.86.

The average volume for DHT Holdings has been 2,344,600 shares per day over the past 30 days. DHT Holdings has a market cap of $471.5 million and is part of the transportation industry. Shares are down 37.8% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates DHT Holdings as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and attractive valuation levels. 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 greatly exceeded the industry average of 24.6%. Since the same quarter one year prior, revenues rose by 12.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • DHT HOLDINGS INC has improved earnings per share by 30.4% 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, DHT HOLDINGS INC increased its bottom line by earning $1.03 versus $0.08 in the prior year. This year, the market expects an improvement in earnings ($1.08 versus $1.03).
  • 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 35.8% when compared to the same quarter one year prior, rising from $23.22 million to $31.53 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, DHT HOLDINGS INC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.

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