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."

Digital Realty

Dividend Yield: 4.30%

Digital Realty

(NYSE:

DLR

) shares currently have a dividend yield of 4.30%.

Digital Realty Trust, Inc., a real estate investment trust (REIT), through its controlling interest in Digital Realty Trust, L.P., engages in the ownership, acquisition, development, redevelopment, and management of technology-related real estate. The company has a P/E ratio of 54.73.

The average volume for Digital Realty has been 1,419,700 shares per day over the past 30 days. Digital Realty has a market cap of $11.9 billion and is part of the real estate industry. Shares are up 6.5% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Digital Realty

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. 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 6.8%. Since the same quarter one year prior, revenues slightly increased by 5.7%. 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 $184.06 million or 17.00% when compared to the same quarter last year. In addition, DIGITAL REALTY TRUST INC has also vastly surpassed the industry average cash flow growth rate of -73.46%.
  • 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, despite 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.
  • DIGITAL REALTY TRUST INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, DIGITAL REALTY TRUST INC reported lower earnings of $0.98 versus $2.10 in the prior year. This year, the market expects an improvement in earnings ($2.05 versus $0.98).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 55.4% when compared to the same quarter one year ago, falling from $127.77 million to $56.98 million.

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EastGroup Properties

Dividend Yield: 4.50%

EastGroup Properties

(NYSE:

EGP

) shares currently have a dividend yield of 4.50%.

EastGroup Properties, Inc., a real estate investment trust (REIT), focuses on the development, acquisition, and operation of industrial properties in the United States. The company has a P/E ratio of 35.58.

The average volume for EastGroup Properties has been 178,500 shares per day over the past 30 days. EastGroup Properties has a market cap of $1.7 billion and is part of the real estate industry. Shares are down 3.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

EastGroup Properties

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.8%. Since the same quarter one year prior, revenues slightly increased by 6.6%. 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 $27.81 million or 23.67% when compared to the same quarter last year. In addition, EASTGROUP PROPERTIES has also vastly surpassed the industry average cash flow growth rate of -73.46%.
  • 39.48% is the gross profit margin for EASTGROUP PROPERTIES which we consider to be strong. Regardless of EGP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 18.66% trails the industry average.
  • EASTGROUP PROPERTIES's earnings per share declined by 12.5% 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 year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, EASTGROUP PROPERTIES reported lower earnings of $1.48 versus $1.52 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $1.48).

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Invesco

Dividend Yield: 4.10%

Invesco

(NYSE:

IVZ

) shares currently have a dividend yield of 4.10%.

Invesco Ltd. is a publicly owned investment manager. The company has a P/E ratio of 11.65.

The average volume for Invesco has been 4,660,500 shares per day over the past 30 days. Invesco has a market cap of $11.0 billion and is part of the financial services industry. Shares are down 21.8% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Invesco

as a

buy

. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 172.07% to $497.90 million when compared to the same quarter last year. In addition, INVESCO LTD has also vastly surpassed the industry average cash flow growth rate of -98.58%.
  • 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 Capital Markets industry and the overall market on the basis of return on equity, INVESCO LTD has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 4.3%. Since the same quarter one year prior, revenues slightly dropped by 2.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • INVESCO LTD's earnings per share declined by 22.6% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, INVESCO LTD reported lower earnings of $2.26 versus $2.27 in the prior year. This year, the market expects an improvement in earnings ($2.42 versus $2.26).
  • The gross profit margin for INVESCO LTD is currently lower than what is desirable, coming in at 28.87%. Regardless of IVZ's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, IVZ's net profit margin of 16.28% compares favorably to the industry average.

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