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."

LTC Properties

Dividend Yield: 5.00%

LTC Properties

(NYSE:

LTC

) shares currently have a dividend yield of 5.00%.

LTC Properties, Inc. operates as a health care real estate investment trust (REIT) in the United States. The company has a P/E ratio of 22.37.

The average volume for LTC Properties has been 247,400 shares per day over the past 30 days. LTC Properties has a market cap of $1.6 billion and is part of the real estate industry. Shares are up 2.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

LTC Properties

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations, increase in net income and growth in earnings per share. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 6.8%. Since the same quarter one year prior, revenues rose by 18.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for LTC PROPERTIES INC is currently very high, coming in at 78.92%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 56.22% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $26.58 million or 10.50% when compared to the same quarter last year. In addition, LTC PROPERTIES INC has also vastly surpassed the industry average cash flow growth rate of -73.46%.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 14.7% when compared to the same quarter one year prior, going from $17.12 million to $19.65 million.
  • LTC PROPERTIES INC has improved earnings per share by 13.0% 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, LTC PROPERTIES INC increased its bottom line by earning $1.99 versus $1.56 in the prior year. For the next year, the market is expecting a contraction of 0.5% in earnings ($1.98 versus $1.99).

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Apollo Commercial Real Estate Finance

Dividend Yield: 11.10%

Apollo Commercial Real Estate Finance

(NYSE:

ARI

) shares currently have a dividend yield of 11.10%.

Apollo Commercial Real Estate Finance, Inc. The company has a P/E ratio of 10.76.

The average volume for Apollo Commercial Real Estate Finance has been 645,300 shares per day over the past 30 days. Apollo Commercial Real Estate Finance has a market cap of $1.1 billion and is part of the real estate industry. Shares are down 1.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Apollo Commercial Real Estate Finance

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, compelling growth in net income, expanding profit margins and relatively strong performance when compared with the S&P 500 during the past year. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • ARI's very impressive revenue growth greatly exceeded the industry average of 6.8%. Since the same quarter one year prior, revenues leaped by 57.6%. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 23.6% when compared to the same quarter one year prior, going from $22.04 million to $27.24 million.
  • The gross profit margin for APOLLO COMMERCIAL RE FIN INC is currently very high, coming in at 86.09%. Regardless of ARI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ARI's net profit margin of 45.80% significantly outperformed against the industry.
  • APOLLO COMMERCIAL RE FIN INC's earnings per share declined by 25.6% 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, APOLLO COMMERCIAL RE FIN INC reported lower earnings of $1.57 versus $1.73 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus $1.57).

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Southern

Dividend Yield: 4.40%

Southern

(NYSE:

SO

) shares currently have a dividend yield of 4.40%.

The Southern Company, together with its subsidiaries, operates as a public electric utility company. The company has a P/E ratio of 18.84.

The average volume for Southern has been 5,502,200 shares per day over the past 30 days. Southern has a market cap of $44.5 billion and is part of the utilities industry. Shares are up 5.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Southern

as a

buy

. The company's strengths can be seen in multiple areas, such as its expanding profit margins 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:

  • SOUTHERN CO' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, SOUTHERN CO increased its bottom line by earning $2.60 versus $2.18 in the prior year. This year, the market expects an improvement in earnings ($2.85 versus $2.60).
  • 36.02% is the gross profit margin for SOUTHERN CO which we consider to be strong. 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 7.84% trails the industry average.
  • SO, with its decline in revenue, slightly underperformed the industry average of 10.1%. Since the same quarter one year prior, revenues fell by 10.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Compared to where it was trading a year ago, SO'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 change in net income from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Electric Utilities industry average. The net income has decreased by 5.7% when compared to the same quarter one year ago, dropping from $300.00 million to $283.00 million.

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