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."

Corrections Corp of America

Dividend Yield: 6.70%

Corrections Corp of America

(NYSE:

CXW

) shares currently have a dividend yield of 6.70%.

Corrections Corporation of America, together with its subsidiaries, owns and operates privatized correctional and detention facilities in the United States. The company has a P/E ratio of 18.02.

The average volume for Corrections Corp of America has been 612,700 shares per day over the past 30 days. Corrections Corp of America has a market cap of $3.8 billion and is part of the real estate industry. Shares are up 21.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Corrections Corp of America

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, reasonable valuation levels and good cash flow from operations. 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 12.1%. Since the same quarter one year prior, revenues slightly increased by 5.0%. 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 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 Real Estate Investment Trusts (REITs) industry and the overall market, CORRECTIONS CORP AMER's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has slightly increased to $120.31 million or 2.66% when compared to the same quarter last year. Despite an increase in cash flow, CORRECTIONS CORP AMER's average is still marginally south of the industry average growth rate of 9.08%.
  • CORRECTIONS CORP AMER's earnings per share declined by 20.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CORRECTIONS CORP AMER increased its bottom line by earning $1.88 versus $1.66 in the prior year. For the next year, the market is expecting a contraction of 2.9% in earnings ($1.83 versus $1.88).

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RLJ Lodging

Dividend Yield: 5.40%

RLJ Lodging

(NYSE:

RLJ

) shares currently have a dividend yield of 5.40%.

RLJ Lodging Trust is an independent equity real estate investment trust. The firm also manages real estate funds. It invests in the real estate markets of the United States. The firm primarily invests in premium-branded, focused service, and compact full-service hotels. The company has a P/E ratio of 15.90.

The average volume for RLJ Lodging has been 1,224,900 shares per day over the past 30 days. RLJ Lodging has a market cap of $3.0 billion and is part of the real estate industry. Shares are up 9.8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

RLJ Lodging

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • RLJ's revenue growth trails the industry average of 12.1%. Since the same quarter one year prior, revenues slightly increased by 1.7%. 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 $55.15 million or 25.19% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 9.08%.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, RLJ LODGING TRUST's return on equity is below that of both the industry average and the S&P 500.
  • RLJ LODGING TRUST's earnings per share declined by 44.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, RLJ LODGING TRUST increased its bottom line by earning $1.68 versus $1.05 in the prior year. For the next year, the market is expecting a contraction of 21.4% in earnings ($1.32 versus $1.68).

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Hospitality Properties

Dividend Yield: 6.40%

Hospitality Properties

(NASDAQ:

HPT

) shares currently have a dividend yield of 6.40%.

Hospitality Properties Trust, a real estate investment trust (REIT), engages in buying, owning, and leasing hotels. The company has a P/E ratio of 30.62.

The average volume for Hospitality Properties has been 819,300 shares per day over the past 30 days. Hospitality Properties has a market cap of $4.8 billion and is part of the real estate industry. Shares are up 21% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Hospitality Properties

as a

buy

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, revenue growth, reasonable valuation levels and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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 company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 25.2% when compared to the same quarter one year prior, rising from $41.58 million to $52.05 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.1%. Since the same quarter one year prior, revenues slightly increased by 8.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HOSPITALITY PROPERTIES TRUST has improved earnings per share by 29.2% 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, HOSPITALITY PROPERTIES TRUST reported lower earnings of $0.97 versus $1.18 in the prior year. This year, the market expects an improvement in earnings ($1.62 versus $0.97).

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