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 or Stephanie Link.

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."

AGL Resources

Dividend Yield: 4.10%

AGL Resources

(NYSE:

GAS

) shares currently have a dividend yield of 4.10%.

AGL Resources Inc., an energy services holding company, distributes natural gas to residential, commercial, industrial, and governmental customers in Illinois, Georgia, Virginia, New Jersey, Florida, Tennessee, and Maryland. The company has a P/E ratio of 10.56.

The average volume for AGL Resources has been 857,600 shares per day over the past 30 days. AGL Resources has a market cap of $6.0 billion and is part of the utilities industry. Shares are down 6.8% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreet Ratings rates

AGL Resources

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, increase in stock price during the past year and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • GAS's very impressive revenue growth greatly exceeded the industry average of 7.6%. Since the same quarter one year prior, revenues leaped by 56.9%. 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 Gas Utilities industry. The net income increased by 131.3% when compared to the same quarter one year prior, rising from $64.00 million to $148.00 million.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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.
  • AGL RESOURCES 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, AGL RESOURCES INC increased its bottom line by earning $4.72 versus $2.33 in the prior year. For the next year, the market is expecting a contraction of 36.3% in earnings ($3.01 versus $4.72).
  • The gross profit margin for AGL RESOURCES INC is currently lower than what is desirable, coming in at 26.71%. Regardless of GAS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, GAS's net profit margin of 10.24% compares favorably to the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Universal

Dividend Yield: 4.50%

Universal

(NYSE:

UVV

) shares currently have a dividend yield of 4.50%.

Universal Corporation operates as a leaf tobacco merchant and processor worldwide. It is engaged in procuring, financing, processing, packing, storing, and shipping leaf tobacco for sale to, or for the account of, manufacturers of consumer tobacco products. The company has a P/E ratio of 13.75.

The average volume for Universal has been 309,600 shares per day over the past 30 days. Universal has a market cap of $1.0 billion and is part of the tobacco industry. Shares are up 6.7% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreet Ratings rates

Universal

as a

buy

. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • UNIVERSAL CORP/VA has improved earnings per share by 37.5% 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. During the past fiscal year, UNIVERSAL CORP/VA increased its bottom line by earning $5.25 versus $4.66 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 Tobacco industry. The net income increased by 37.5% when compared to the same quarter one year prior, rising from $38.59 million to $53.04 million.
  • The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.10, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to $352.12 million or 20.17% when compared to the same quarter last year. In addition, UNIVERSAL CORP/VA has also vastly surpassed the industry average cash flow growth rate of -56.40%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Colony Financial

Dividend Yield: 6.10%

Colony Financial

(NYSE:

CLNY

) shares currently have a dividend yield of 6.10%.

Colony Financial, Inc., a real estate investment and finance company, focuses on acquiring, originating, and managing various real estate-related debt and equity investments. The company has a P/E ratio of 20.24.

The average volume for Colony Financial has been 1,072,400 shares per day over the past 30 days. Colony Financial has a market cap of $2.6 billion and is part of the real estate industry. Shares are up 1.2% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreet Ratings rates

Colony Financial

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • CLNY's very impressive revenue growth greatly exceeded the industry average of 1.0%. Since the same quarter one year prior, revenues leaped by 59.4%. 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 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 47.3% when compared to the same quarter one year prior, rising from $26.45 million to $38.95 million.
  • The gross profit margin for COLONY FINANCIAL INC is currently very high, coming in at 74.89%. Regardless of CLNY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CLNY's net profit margin of 50.40% significantly outperformed against the industry.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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.
  • COLONY FINANCIAL INC's earnings per share declined by 6.3% in the most recent quarter compared to 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, COLONY FINANCIAL INC reported lower earnings of $1.19 versus $1.34 in the prior year. This year, the market expects an improvement in earnings ($1.52 versus $1.19).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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