Best Of The Buy-Rated Dividend Stocks: Top 3 Companies: LAMR, DIN, HST

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: 4.50%

Lamar Advertising (NASDAQ: LAMR) shares currently have a dividend yield of 4.50%.

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 23.72.

The average volume for Lamar Advertising has been 505,600 shares per day over the past 30 days. Lamar Advertising has a market cap of $6.5 billion and is part of the real estate industry. Shares are up 12.8% year-to-date as of the close of trading on Monday.

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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 revenue growth, solid stock price performance, growth in earnings per share, increase in net income and expanding profit margins. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • LAMR's revenue growth has slightly outpaced the industry average of 11.9%. Since the same quarter one year prior, revenues rose by 11.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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. 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.
  • LAMAR ADVERTISING CO has improved earnings per share by 26.2% 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, LAMAR ADVERTISING CO increased its bottom line by earning $2.71 versus $2.66 in the prior year. This year, the market expects an improvement in earnings ($3.09 versus $2.71).
  • 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 26.0% when compared to the same quarter one year prior, rising from $40.72 million to $51.31 million.
  • The gross profit margin for LAMAR ADVERTISING CO is rather high; currently it is at 62.29%. Regardless of LAMR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LAMR's net profit margin of 15.15% is significantly lower than the industry average.

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DineEquity

Dividend Yield: 4.40%

DineEquity (NYSE: DIN) shares currently have a dividend yield of 4.40%.

DineEquity, Inc., together with its subsidiaries, owns, franchises, operates, and rents full-service restaurants in the United States and internationally. The company has a P/E ratio of 15.30.

The average volume for DineEquity has been 236,900 shares per day over the past 30 days. DineEquity has a market cap of $1.5 billion and is part of the leisure industry. Shares are down 2.8% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates DineEquity as a buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins 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:
  • The gross profit margin for DINEEQUITY INC is rather high; currently it is at 64.22%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.62% is above that of the industry average.
  • 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. In comparison to other companies in the Hotels, Restaurants & Leisure industry and the overall market on the basis of return on equity, DINEEQUITY INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • DINEEQUITY INC's earnings per share declined by 6.8% 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, DINEEQUITY INC increased its bottom line by earning $5.50 versus $1.89 in the prior year. This year, the market expects an improvement in earnings ($6.10 versus $5.50).
  • DIN, with its decline in revenue, underperformed when compared the industry average of 10.7%. Since the same quarter one year prior, revenues slightly dropped by 7.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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Host Hotels & Resorts

Dividend Yield: 4.70%

Host Hotels & Resorts (NYSE: HST) shares currently have a dividend yield of 4.70%.

Host Hotels & Resorts, Inc. is a publicly owned real estate investment trust (REIT). The firm primarily engages in the ownership and operation of hotel properties. It invests in the real estate markets of United States. The company has a P/E ratio of 19.98.

The average volume for Host Hotels & Resorts has been 10,004,900 shares per day over the past 30 days. Host Hotels & Resorts has a market cap of $12.7 billion and is part of the real estate industry. Shares are up 11.4% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Host Hotels & Resorts as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, 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 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 85.7% when compared to the same quarter one year prior, rising from $98.00 million to $182.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.9%. Since the same quarter one year prior, revenues slightly increased by 2.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $219.00 million or 26.58% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 11.78%.
  • HOST HOTELS & RESORTS INC 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, HOST HOTELS & RESORTS INC reported lower earnings of $0.74 versus $0.97 in the prior year. This year, the market expects an improvement in earnings ($0.98 versus $0.74).

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