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."

RR Donnelley & Sons

Dividend Yield: 6.50%

RR Donnelley & Sons

(NASDAQ:

RRD

) shares currently have a dividend yield of 6.50%.

R.R. Donnelley & Sons Company provides integrated communications solutions to private and public sector clients in the United States and internationally. The company operates through Publishing and Retail Services, Variable Print, Strategic Services, and International segments. The company has a P/E ratio of 21.95.

The average volume for RR Donnelley & Sons has been 1,618,400 shares per day over the past 30 days. RR Donnelley & Sons has a market cap of $3.3 billion and is part of the diversified services industry. Shares are up 6.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

RR Donnelley & Sons

as a

buy

. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • DONNELLEY (R R) & SONS CO 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 year. We feel that this trend should continue. During the past fiscal year, DONNELLEY (R R) & SONS CO increased its bottom line by earning $0.73 versus $0.58 in the prior year. This year, the market expects an improvement in earnings ($1.55 versus $0.73).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Services & Supplies industry. The net income increased by 264.1% when compared to the same quarter one year prior, rising from $19.50 million to $71.00 million.
  • 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 Commercial Services & Supplies industry and the overall market, DONNELLEY (R R) & SONS CO's return on equity exceeds that of both the industry average and the S&P 500.
  • RRD, with its decline in revenue, slightly underperformed the industry average of 1.1%. Since the same quarter one year prior, revenues slightly dropped by 4.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for DONNELLEY (R R) & SONS CO is rather low; currently it is at 22.13%. Regardless of RRD's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.41% trails the industry average.

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Washington REIT

Dividend Yield: 4.40%

Washington REIT

(NYSE:

WRE

) shares currently have a dividend yield of 4.40%.

Washington Real Estate Investment Trust is an equity real estate investment trust (REIT). The company engages in the ownership, operation, and development of real properties. The firm invests in real estate markets of the greater Washington D.C. metro region. The company has a P/E ratio of 20.76.

The average volume for Washington REIT has been 442,200 shares per day over the past 30 days. Washington REIT has a market cap of $1.9 billion and is part of the real estate industry. Shares are down 0.3% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Washington REIT

as a

buy

. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, increase in net income, revenue growth, attractive valuation levels and notable return on equity. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • WASHINGTON REIT 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. During the past fiscal year, WASHINGTON REIT increased its bottom line by earning $1.31 versus $0.06 in the prior year.
  • 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 2551.8% when compared to the same quarter one year prior, rising from $2.34 million to $62.13 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.0%. Since the same quarter one year prior, revenues slightly increased by 6.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • After a year of stock price fluctuations, the net result is that WRE'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 toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.

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Buckeye Partners

Dividend Yield: 6.80%

Buckeye Partners

(NYSE:

BPL

) shares currently have a dividend yield of 6.80%.

Buckeye Partners, L.P. owns and operates liquid petroleum products pipeline systems in the United States. The company operates through four segments: Pipelines & Terminals, Global Marine Terminals, Merchant Services, and Development & Logistics. The company has a P/E ratio of 20.49.

The average volume for Buckeye Partners has been 981,300 shares per day over the past 30 days. Buckeye Partners has a market cap of $9.1 billion and is part of the energy industry. Shares are up 3% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Buckeye Partners

as a

buy

. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • BUCKEYE PARTNERS LP 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, BUCKEYE PARTNERS LP increased its bottom line by earning $3.40 versus $2.79 in the prior year. This year, the market expects an improvement in earnings ($4.24 versus $3.40).
  • 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 137.1% when compared to the same quarter one year prior, rising from $56.52 million to $133.99 million.
  • BPL, with its decline in revenue, slightly underperformed the industry average of 34.5%. Since the same quarter one year prior, revenues fell by 34.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for BUCKEYE PARTNERS LP is currently lower than what is desirable, coming in at 30.81%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, BPL's net profit margin of 15.94% significantly outperformed against the industry.
  • BPL has underperformed the S&P 500 Index, declining 11.97% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.

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