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."

Pepco Holdings

Dividend Yield: 4.10%

Pepco Holdings

(NYSE:

POM

) shares currently have a dividend yield of 4.10%.

Pepco Holdings, Inc., through its subsidiaries, engages in the transmission, distribution, and supply of electricity. The company operates through Power Delivery and Pepco Energy Services segments. It also distributes and supplies natural gas. The company has a P/E ratio of 20.62.

The average volume for Pepco Holdings has been 2,214,600 shares per day over the past 30 days. Pepco Holdings has a market cap of $6.8 billion and is part of the utilities industry. Shares are up 0.7% year-to-date as of the close of trading on Monday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreet Ratings rates

Pepco Holdings

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, good cash flow from operations, impressive record of earnings per share growth and notable return on equity. 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 came in higher than the industry average of 8.5%. Since the same quarter one year prior, revenues slightly increased by 2.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 271.4% when compared to the same quarter one year prior, rising from $35.00 million to $130.00 million.
  • Net operating cash flow has significantly increased by 221.90% to $338.00 million when compared to the same quarter last year. In addition, PEPCO HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of -5.83%.
  • PEPCO HOLDINGS INC 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, PEPCO HOLDINGS INC increased its bottom line by earning $1.26 versus $0.96 in the prior year. For the next year, the market is expecting a contraction of 6.3% in earnings ($1.18 versus $1.26).
  • 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. When compared to other companies in the Electric Utilities industry and the overall market, PEPCO HOLDINGS INC's return on equity is below that of both the industry average and the S&P 500.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

Nordic American Tankers

Dividend Yield: 12.40%

Nordic American Tankers

(NYSE:

NAT

) shares currently have a dividend yield of 12.40%.

Nordic American Tankers Limited, a tanker company, engages in acquiring and chartering double-hull tankers. As of December 31, 2014, it owned 24 Suezmax crude oil tankers, including two new buildings under construction. The company was founded in 1995 and is based in Hamilton, Bermuda.

The average volume for Nordic American Tankers has been 1,940,100 shares per day over the past 30 days. Nordic American Tankers has a market cap of $1.2 billion and is part of the transportation industry. Shares are down 11.1% year-to-date as of the close of trading on Monday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreet Ratings rates

Nordic American Tankers

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, notable return on equity, expanding profit margins and good cash flow from operations. 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:

  • The revenue growth greatly exceeded the industry average of 33.0%. Since the same quarter one year prior, revenues rose by 20.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 950.00% and other important driving factors, this stock has surged by 33.39% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NAT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, NORDIC AMERICAN TANKERS LTD's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • The gross profit margin for NORDIC AMERICAN TANKERS LTD is rather high; currently it is at 51.99%. It has increased significantly from the same period last year. Along with this, the net profit margin of 26.32% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $35.19 million or 26.39% when compared to the same quarter last year. In addition, NORDIC AMERICAN TANKERS LTD has also vastly surpassed the industry average cash flow growth rate of -39.95%.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

Healthcare Trust of America

Dividend Yield: 4.30%

Healthcare Trust of America

(NYSE:

HTA

) shares currently have a dividend yield of 4.30%.

Healthcare Trust of America is a fully integrated, self-administered and internally managed real estate investment trust, or REIT. The company acquires, owns and operates medical office buildings and other facilities that serve the healthcare industry. The company has a P/E ratio of 106.42.

The average volume for Healthcare Trust of America has been 1,003,400 shares per day over the past 30 days. Healthcare Trust of America has a market cap of $3.6 billion and is part of the real estate industry. Shares are up 3.1% year-to-date as of the close of trading on Monday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreet Ratings rates

Healthcare Trust of America

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 7.3%. Since the same quarter one year prior, revenues slightly increased by 5.8%. 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 $52.44 million or 34.62% when compared to the same quarter last year. In addition, HEALTHCARE TRUST OF AMERICA has also vastly surpassed the industry average cash flow growth rate of -69.51%.
  • HEALTHCARE TRUST OF AMERICA 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 year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, HEALTHCARE TRUST OF AMERICA reported lower earnings of $0.25 versus $0.37 in the prior year. This year, the market expects an improvement in earnings ($0.41 versus $0.25).
  • Compared to where it was trading a year ago, HTA's share price has not changed very much due to (a) the relatively weak year-over-year performance of the overall market, (b) the company's stagnant earnings, and (c) other mixed results. 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.
  • 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 51.0% when compared to the same quarter one year ago, falling from $21.19 million to $10.37 million.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

Other helpful dividend tools from TheStreet: