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."

People's United Financial

Dividend Yield: 4.10%

People's United Financial

(NASDAQ:

PBCT

) shares currently have a dividend yield of 4.10%.

People's United Financial, Inc. operates as the bank holding company for People's United Bank that provides commercial banking, retail banking, and wealth management services to individual, corporate, and municipal customers. The company has a P/E ratio of 19.45.

The average volume for People's United Financial has been 3,562,100 shares per day over the past 30 days. People's United Financial has a market cap of $5.1 billion and is part of the banking industry. Shares are up 10.7% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

People's United Financial

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, expanding profit margins and solid stock price performance. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:

  • PBCT's revenue growth has slightly outpaced the industry average of 3.6%. Since the same quarter one year prior, revenues slightly increased by 4.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • PEOPLE'S UNITED FINL INC has improved earnings per share by 9.5% 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, PEOPLE'S UNITED FINL INC increased its bottom line by earning $0.85 versus $0.74 in the prior year. This year, the market expects an improvement in earnings ($0.86 versus $0.85).
  • 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 Commercial Banks industry average. The net income increased by 11.0% when compared to the same quarter one year prior, going from $61.60 million to $68.40 million.
  • The gross profit margin for PEOPLE'S UNITED FINL INC is currently very high, coming in at 88.43%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 19.15% trails the industry average.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

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Williams Companies

Dividend Yield: 6.80%

Williams Companies

(NYSE:

WMB

) shares currently have a dividend yield of 6.80%.

The Williams Companies, Inc. operates as an energy infrastructure company primarily in the United States. The company operates in three segments: Williams Partners, Access Midstream, and Williams NGL & Petchem Services. The company has a P/E ratio of 53.53.

The average volume for Williams Companies has been 9,244,100 shares per day over the past 30 days. Williams Companies has a market cap of $28.1 billion and is part of the energy industry. Shares are down 14.8% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Williams Companies

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and increase in net income. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 34.1%. Since the same quarter one year prior, revenues slightly increased by 9.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, WILLIAMS COS INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • 49.37% is the gross profit margin for WILLIAMS COS INC which we consider to be strong. It has increased significantly from the same period last year. Along with this, the net profit margin of 6.19% is above that of the industry average.
  • Net operating cash flow has significantly increased by 160.06% to $814.00 million when compared to the same quarter last year. In addition, WILLIAMS COS INC has also vastly surpassed the industry average cash flow growth rate of -19.46%.
  • 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 10.7% when compared to the same quarter one year prior, going from $103.00 million to $114.00 million.

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Advanced Semiconductor Engineering

Dividend Yield: 5.20%

Advanced Semiconductor Engineering

(NYSE:

ASX

) shares currently have a dividend yield of 5.20%.

Advanced Semiconductor Engineering, Inc. provides semiconductor packaging and testing services in the United States, Taiwan, Asia, Europe, and internationally. It operates through Packaging, Testing, and Electronic Manufacturing Services (EMS) segments. The company has a P/E ratio of 18.12.

The average volume for Advanced Semiconductor Engineering has been 1,629,000 shares per day over the past 30 days. Advanced Semiconductor Engineering has a market cap of $9.4 billion and is part of the electronics industry. Shares are down 3.3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Advanced Semiconductor Engineering

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures, notable return on equity and increase in stock price during the past year. 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 revenue growth came in higher than the industry average of 13.4%. Since the same quarter one year prior, revenues rose by 15.1%. 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.
  • The debt-to-equity ratio is somewhat low, currently at 0.64, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.87 is somewhat weak and could be cause for future problems.
  • 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 Semiconductors & Semiconductor Equipment industry and the overall market on the basis of return on equity, ADVANCED SEMICON ENGINEERING has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • In its most recent trading session, ASX has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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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