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."

PacWest Bancorp

Dividend Yield: 4.50%

PacWest Bancorp

(NASDAQ:

PACW

) shares currently have a dividend yield of 4.50%.

PacWest Bancorp operates as the holding company for Pacific Western Bank that provides commercial banking products and services to individuals, professionals, and small to mid-sized businesses in the United States. It accepts demand, money market, and time deposits. The company has a P/E ratio of 14.96.

The average volume for PacWest Bancorp has been 729,400 shares per day over the past 30 days. PacWest Bancorp has a market cap of $4.6 billion and is part of the banking industry. Shares are down 1.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

PacWest Bancorp

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, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 1.1%. 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.
  • PACWEST BANCORP reported significant earnings per share improvement 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, PACWEST BANCORP increased its bottom line by earning $1.97 versus $1.08 in the prior year. This year, the market expects an improvement in earnings ($2.90 versus $1.97).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 706.1% when compared to the same quarter one year prior, rising from $10.56 million to $85.08 million.
  • The gross profit margin for PACWEST BANCORP is currently very high, coming in at 90.58%. Regardless of PACW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PACW's net profit margin of 35.73% significantly outperformed against the industry.
  • Net operating cash flow has significantly increased by 552.48% to $152.51 million when compared to the same quarter last year. Despite an increase in cash flow of 552.48%, PACWEST BANCORP is still growing at a significantly lower rate than the industry average of 2845.02%.

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National Health Investors

Dividend Yield: 5.70%

National Health Investors

(NYSE:

NHI

) shares currently have a dividend yield of 5.70%.

National Health Investors Inc. is a real estate investment trust. It invests in the real estate markets of United States. The firm invests in the health care properties primarily in the long-term care and senior housing industries. The company has a P/E ratio of 18.72.

The average volume for National Health Investors has been 255,500 shares per day over the past 30 days. National Health Investors has a market cap of $2.2 billion and is part of the real estate industry. Shares are down 14.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

National Health Investors

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, good cash flow from operations, expanding profit margins and solid stock price performance. 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 came in higher than the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 26.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • NATIONAL HEALTH INVESTORS has improved earnings per share by 9.2% 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, NATIONAL HEALTH INVESTORS increased its bottom line by earning $3.03 versus $2.76 in the prior year. This year, the market expects an improvement in earnings ($3.34 versus $3.03).
  • Net operating cash flow has increased to $41.43 million or 26.53% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 16.32%.
  • The gross profit margin for NATIONAL HEALTH INVESTORS is currently very high, coming in at 76.47%. Regardless of NHI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NHI's net profit margin of 55.65% significantly outperformed against the industry.
  • After a year of stock price fluctuations, the net result is that NHI's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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.

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Old Republic International Corporation

Dividend Yield: 4.60%

Old Republic International Corporation

(NYSE:

ORI

) shares currently have a dividend yield of 4.60%.

Old Republic International Corporation, through its subsidiaries, engages in the insurance underwriting and related services business primarily in the United States and Canada. The company has a P/E ratio of 12.95.

The average volume for Old Republic International Corporation has been 1,160,400 shares per day over the past 30 days. Old Republic International Corporation has a market cap of $4.2 billion and is part of the insurance industry. Shares are up 13% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Old Republic International Corporation

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, good cash flow from operations, solid stock price performance 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 came in higher than the industry average of 12.3%. Since the same quarter one year prior, revenues slightly increased by 5.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although ORI's debt-to-equity ratio of 0.24 is very low, it is currently higher than that of the industry average.
  • 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.
  • 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 54.5% when compared to the same quarter one year prior, rising from $66.10 million to $102.10 million.
  • Net operating cash flow has significantly increased by 204.86% to $112.80 million when compared to the same quarter last year. In addition, OLD REPUBLIC INTL CORP has also vastly surpassed the industry average cash flow growth rate of -45.91%.

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