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."

PacWest Bancorp

Dividend Yield: 4.90%

PacWest Bancorp

(NASDAQ:

PACW

) shares currently have a dividend yield of 4.90%.

PacWest Bancorp operates as the holding company for Pacific Western Bank that provides commercial banking products and services. The company accepts demand, money market, and time deposits. The company has a P/E ratio of 14.48.

The average volume for PacWest Bancorp has been 793,800 shares per day over the past 30 days. PacWest Bancorp has a market cap of $4.9 billion and is part of the banking industry. Shares are down 4.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

PacWest Bancorp

as a

buy

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

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 0.7%. Since the same quarter one year prior, revenues rose by 13.1%. 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.
  • PACWEST BANCORP's earnings per share declined by 18.1% 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, PACWEST BANCORP increased its bottom line by earning $2.82 versus $1.97 in the prior year. This year, the market expects an improvement in earnings ($2.84 versus $2.82).
  • The gross profit margin for PACWEST BANCORP is currently very high, coming in at 89.90%. Regardless of PACW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PACW's net profit margin of 30.52% compares favorably to the industry average.
  • The change in net income from the same quarter one year ago has exceeded that of the Commercial Banks industry average, but is less than that of the S&P 500. The net income has decreased by 3.4% when compared to the same quarter one year ago, dropping from $85.08 million to $82.17 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Commercial Banks industry and the overall market, PACWEST BANCORP's return on equity is below that of both the industry average and the S&P 500.

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PPL

Dividend Yield: 4.10%

PPL

(NYSE:

PPL

) shares currently have a dividend yield of 4.10%.

PPL Corporation, a utility company, delivers electricity and natural gas in the United States and the United Kingdom. The company has a P/E ratio of 16.61.

The average volume for PPL has been 4,935,400 shares per day over the past 30 days. PPL has a market cap of $25.4 billion and is part of the utilities industry. Shares are up 9.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

PPL

as a

buy

. The company's strengths can be seen in multiple areas, such as its notable return on equity, 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:

  • 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 Electric Utilities industry and the overall market, PPL CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for PPL CORP is rather high; currently it is at 52.31%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.91% significantly outperformed against the industry average.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. 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.
  • PPL, with its decline in revenue, slightly underperformed the industry average of 7.8%. Since the same quarter one year prior, revenues slightly dropped by 9.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • PPL CORP's earnings per share declined by 14.4% 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, PPL CORP increased its bottom line by earning $2.38 versus $2.18 in the prior year. For the next year, the market is expecting a contraction of 1.5% in earnings ($2.35 versus $2.38).

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Umpqua Holdings

Dividend Yield: 4.20%

Umpqua Holdings

(NASDAQ:

UMPQ

) shares currently have a dividend yield of 4.20%.

Umpqua Holdings Corporation, through its subsidiaries, engages in the commercial and retail banking, and retail brokerage businesses. It operates through Community Banking and Home Lending segments. The company has a P/E ratio of 15.03.

The average volume for Umpqua Holdings has been 1,860,000 shares per day over the past 30 days. Umpqua Holdings has a market cap of $3.3 billion and is part of the banking industry. Shares are down 4.1% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Umpqua Holdings

as a

buy

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

Highlights from the ratings report include:

  • UMPQUA HOLDINGS CORP reported flat earnings per share in the most recent 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, UMPQUA HOLDINGS CORP increased its bottom line by earning $1.01 versus $0.76 in the prior year. This year, the market expects an improvement in earnings ($1.07 versus $1.01).
  • The gross profit margin for UMPQUA HOLDINGS CORP is currently very high, coming in at 91.06%. Regardless of UMPQ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 18.08% trails the industry average.
  • UMPQ, with its decline in revenue, slightly underperformed the industry average of 0.7%. Since the same quarter one year prior, revenues slightly dropped by 4.1%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable 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. When compared to other companies in the Commercial Banks industry and the overall market, UMPQUA HOLDINGS CORP's return on equity is below that of both the industry average and the S&P 500.
  • The change in net income from the same quarter one year ago has exceeded that of the Commercial Banks industry average, but is less than that of the S&P 500. The net income has decreased by 0.9% when compared to the same quarter one year ago, dropping from $54.78 million to $54.29 million.

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