A company that posts disappointing earnings results can present a good buying opportunity for income investors. The reason for this is that companies miss analyst earnings estimates for all kinds of reasons, many of which unrelated to the fundamentals of the business. Yet, in most cases, the earnings miss automatically triggers a share price decline, even if it’s temporary.

Quite often, poor earnings results correctly predict that a firm’s performance is weakening, but there are many other companies whose earnings miss is simply not that meaningful. That is the case for many asset-based businesses such as utilities, oil and gas companies and real estate investment trusts (REITs), where cash flow is a much better predictor of success than earnings. As long as the company’s cash flow is growing as fast or faster than the dividend, these stocks are solid income plays that become even more appealing when an earnings miss takes their price lower.

Here are three high-yielding stocks that recently took a beating in the market because of earnings misses. Yet each of these stocks offers a generous dividend well-covered by strong, rising cash flow. 

1. Northwest Natural Gas Co. (NYSE: NWN)
Yield: 4%

Northwest is the largest independent natural gas utility in the Pacific Northwest. The company serves 681,000 homes and businesses in western Oregon and southwestern Washington.

Analysts expected the company to report earnings per share (EPS) of 16 cents in the second quarter of 2012, but Northwest actually delivered earnings of 5 cents a share and a whopping 69% earnings miss.

The reasons for the miss were higher operating costs and lower volume due to unusually warm weather. Despite the miss, there were also positive developments during the quarter such as acceleration in the annualized customer growth rate to 0.9% and a 4% rise in cash flow to $175 million from a year earlier. Management confirmed guidance of full-year EPS between $2.35 and $2.55.

At this level, EPS would provide comfortable 140% coverage of the dividend. Analysts expect a 5% rate hike for Northwest beginning in November will drive 8% earnings growth next year and 5% growth for the next five years.

Northwest shares dipped roughly 3% on news of the EPS miss, but the share price has since recovered to a $50 range. Dividend growth averages 5% a year and Northwest current $1.78 annual dividend yields almost 4%. With rising earnings and comfortable cash flow coverage, Northwest has plenty of room to grow the dividend even during weather-related EPS dips.

2. Lorillard Inc. (NYSE: LO)
Yield: 5%

Lorillard is the third-largest tobacco company in the United States. The company went public in 2008 when Loews Corp. (NYSE: L) sold its majority ownership interest. Lorillard’s flagship Newport brand is the best-selling menthol cigarette in the United States and Lorillard also owns the popular Kent, True, Maverick and Old Gold brands.

Lorillard’s EPS improved 7% during the second quarter of 2012 to $2.19 from $2.05 a year earlier. The company also grew sales 2% to $1.73 billion and increased its retail market share to 14.3% in the period. Analysts estimated EPS would be $2.32, but the result was a 6% EPS miss, which caused a nearly 8% share price decline.

Despite this miss, the long-term outlook remains bright. Lorillard recently reaffirmed its goal of delivering double-digit shareholder returns this year (as measured by EPS growth and dividend yield) and analysts target 9% earnings growth this year accelerating to 10% growth next year.

Lorillard’s dividend payout is high at 70% of earnings and 60% of cash flow, but manageable because of the high predictability of the company’s cash flows. Lorillard hit the ground running in 2008 by paying a $3.68 annual dividend and has since increased payout 68% to an annual rate of $6.20 presently yielding 4.7%.

3. Corporate Office Properties Trust (NYSE: OFC)
Yield: 5%

This office REIT occupies a unique niche leasing office space to U.S. government contractors and the defense information technology sector. Corporate Office began a major portfolio repositioning last year that is focused on selling nonstrategic assets and reinvesting the proceeds in higher-quality properties and the company is ahead of plan, according to the CEO. So far, Corporate Office has sold 58 older, smaller buildings for $394 million and recycled $50 million of the proceeds into Class A properties that are 99% leased.

The current portfolio consists of 228 office properties totaling 19.8 million square feet. The average remaining lease term for these properties is five years and the portfolio is 89% leased.

Corporate Office produced earnings of 9 cents in the second quarter of 2012, which was a major improvement from loss of 42 cents one year earlier. But consensus analyst estimates forecast EPS at 13 cents. The difference resulted in a 30% earnings miss and a 5% drop in the share price.

REITs cover dividends with funds from operations (FFO) rather than with earnings, and Corporate Office nearly doubled FFO per share to $1.08 during the first six months of 2012 from $0.58 in the same period last year. The company has issued guidance for full year 2012 FFO per share in a $2.02 to $2.08 range. This would provide nearly two-fold coverage of the $1.10 annual dividend.

Office Properties had raised its dividend 14 years in a row, but cut payout 33% in January to free up more cash for new development projects. At the new dividend rate, coverage from FFO is generous and the odds of another cut are extremely unlikely.

Risks to Consider: All three of these companies are in mature, low growth industries so the likelihood of sizable EPS and share price gains is small. REIT dividends are mostly taxed as ordinary income so these investments are best held in tax-sheltered accounts.

Action to Take — > Both Northwest and Lorillard offer safe dividends and generous yields, while Lorillard is also bargain-priced at a 16 price-to-earnings (P/E) ratio, well below the 19 P/E of tobacco industry peers. Corporate Office is a bit riskier because of its restructuring, but well-positioned in a high-growth IT niche. Investors should also consider the company’s new Series L preferred stock (OFC-L) yielding roughly 7.5%.

[Note: If you haven’t already seen it, don’t miss StreetAuthority’s report — “Top 5 Income Stocks for  2012.” These five select investments pay dividend yields of 7.5%… 8.8%… even 11.5%. For more details  on these investments, you can visit this link without having to sit through a video presentation.]