Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer

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."

New Jersey Resources Corporation

Dividend Yield: 5.80%

New Jersey Resources Corporation

(NYSE:

NJR

) shares currently have a dividend yield of 5.80%.

New Jersey Resources Corporation, an energy services holding company, provides regulated gas distribution services, and retail and wholesale energy services. The company has a P/E ratio of 10.24.

The average volume for New Jersey Resources Corporation has been 529,000 shares per day over the past 30 days. New Jersey Resources Corporation has a market cap of $2.6 billion and is part of the utilities industry. Shares are down 0.2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

New Jersey Resources Corporation

as a

buy

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income, notable return on equity, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • Powered by its strong earnings growth of 1500.00% and other important driving factors, this stock has surged by 28.76% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains 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 Gas Utilities industry. The net income increased by 1503.0% when compared to the same quarter one year prior, rising from $7.69 million to $123.32 million.
  • 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 Gas Utilities industry and the overall market, NEW JERSEY RESOURCES CORP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • Net operating cash flow has significantly increased by 159.35% to $40.85 million when compared to the same quarter last year. In addition, NEW JERSEY RESOURCES CORP has also vastly surpassed the industry average cash flow growth rate of -56.41%.
  • The debt-to-equity ratio is somewhat low, currently at 0.90, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.39 is very weak and demonstrates a lack of ability to pay short-term obligations.

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PDL BioPharma

Dividend Yield: 8.30%

PDL BioPharma

(NASDAQ:

PDLI

) shares currently have a dividend yield of 8.30%.

PDL BioPharma, Inc. manages a portfolio of patents and royalty assets in the United States and Europe. The company is involved in the humanization of monoclonal antibodies and the discovery of a new generation of targeted treatments for cancer and immunologic diseases. It offers Queen et al. The company has a P/E ratio of 3.91.

The average volume for PDL BioPharma has been 3,470,500 shares per day over the past 30 days. PDL BioPharma has a market cap of $1.2 billion and is part of the drugs industry. Shares are down 9.2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

PDL BioPharma

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • PDLI's revenue growth trails the industry average of 34.7%. Since the same quarter one year prior, revenues rose by 19.7%. 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 $69.04 million or 12.79% when compared to the same quarter last year. Despite an increase in cash flow, PDL BIOPHARMA INC's cash flow growth rate is still lower than the industry average growth rate of 49.09%.
  • PDLI's debt-to-equity ratio of 0.98 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that PDLI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.87 is high and demonstrates strong liquidity.
  • PDL BIOPHARMA INC's earnings per share declined by 17.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PDL BIOPHARMA INC increased its bottom line by earning $1.89 versus $1.73 in the prior year. This year, the market expects an improvement in earnings ($2.20 versus $1.89).

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KKR

Dividend Yield: 6.10%

KKR

(NYSE:

KKR

) shares currently have a dividend yield of 6.10%.

KKR & Co. L.P. is a private equity and real estate investment firm specializing in direct and fund of fund investments. It specializes in acquisitions, leveraged buyouts, management buyouts, credit special situations, growth equity, mature, mezzanine, distressed, and middle market investments. The company has a P/E ratio of 19.84.

The average volume for KKR has been 2,384,800 shares per day over the past 30 days. KKR has a market cap of $10.0 billion and is part of the financial services industry. Shares are down 1.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

KKR

as a

buy

. The company's strengths can be seen in multiple areas, such as its attractive valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • 48.69% is the gross profit margin for KKR & CO LP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, KKR's net profit margin of -0.04% significantly underperformed when compared to the industry average.
  • KKR & CO LP 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, KKR & CO LP reported lower earnings of $1.28 versus $2.29 in the prior year. This year, the market expects an improvement in earnings ($2.62 versus $1.28).
  • KKR, with its very weak revenue results, has greatly underperformed against the industry average of 13.2%. Since the same quarter one year prior, revenues plummeted by 68.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Capital Markets industry and the overall market, KKR & CO LP's return on equity is below that of both the industry average and the S&P 500.

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