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."

CenturyLink

Dividend Yield: 6.80%

CenturyLink

(NYSE:

CTL

) shares currently have a dividend yield of 6.80%.

CenturyLink, Inc. provides various communications services to residential, business, wholesale, and governmental customers in the United States. It operates through two segments, Business and Consumer. The company has a P/E ratio of 19.02.

The average volume for CenturyLink has been 6,135,100 shares per day over the past 30 days. CenturyLink has a market cap of $17.3 billion and is part of the telecommunications industry. Shares are up 25.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

CenturyLink

as a

buy

. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, revenue growth, expanding profit margins, notable return on equity and increase in net income. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • CENTURYLINK 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. We feel that this trend should continue. During the past fiscal year, CENTURYLINK INC increased its bottom line by earning $1.59 versus $1.35 in the prior year. This year, the market expects an improvement in earnings ($2.60 versus $1.59).
  • CTL's revenue growth trails the industry average of 15.1%. Since the same quarter one year prior, revenues slightly increased by 0.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for CENTURYLINK INC is rather high; currently it is at 57.28%. 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 7.55% trails the industry average.
  • 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. In comparison to the other companies in the Diversified Telecommunication Services industry and the overall market, CENTURYLINK INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Diversified Telecommunication Services industry average, but is greater than that of the S&P 500. The net income increased by 79.8% when compared to the same quarter one year prior, rising from $188.00 million to $338.00 million.

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Healthcare Realty

Dividend Yield: 4.10%

Healthcare Realty

(NYSE:

HR

) shares currently have a dividend yield of 4.10%.

Healthcare Realty Trust Incorporated is an independent real estate investment trust. The firm invests in real estate markets of the United States. The company has a P/E ratio of 49.59.

The average volume for Healthcare Realty has been 1,183,100 shares per day over the past 30 days. Healthcare Realty has a market cap of $3.0 billion and is part of the real estate industry. Shares are up 3.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Healthcare Realty

as a

buy

. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, solid stock price performance, impressive record of earnings per share growth and notable return on equity. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry average. The net income increased by 3.2% when compared to the same quarter one year prior, going from $18.07 million to $18.66 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.0%. Since the same quarter one year prior, revenues slightly increased by 3.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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. Although other factors naturally played a role, the company's strong earnings growth was key. 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.
  • HEALTHCARE REALTY TRUST 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, HEALTHCARE REALTY TRUST INC increased its bottom line by earning $0.59 versus $0.34 in the prior year. For the next year, the market is expecting a contraction of 13.6% in earnings ($0.51 versus $0.59).
  • 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, HEALTHCARE REALTY TRUST INC's return on equity is below that of both the industry average and the S&P 500.

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National Health Investors

Dividend Yield: 5.60%

National Health Investors

(NYSE:

NHI

) shares currently have a dividend yield of 5.60%.

National Health Investors Inc. is a real estate investment trust. It invests in the real estate markets of United States. The firm invests in the health care properties primarily in the long-term care and senior housing industries. The company has a P/E ratio of 16.41.

The average volume for National Health Investors has been 289,800 shares per day over the past 30 days. National Health Investors has a market cap of $2.5 billion and is part of the real estate industry. Shares are up 4.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

National Health Investors

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, good cash flow from operations, expanding profit margins and notable return on equity. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 8.0%. Since the same quarter one year prior, revenues rose by 26.8%. 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 Real Estate Investment Trusts (REITs) industry. The net income increased by 97.6% when compared to the same quarter one year prior, rising from $27.53 million to $54.40 million.
  • Net operating cash flow has increased to $43.63 million or 32.49% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 1.24%.
  • The gross profit margin for NATIONAL HEALTH INVESTORS is currently very high, coming in at 75.76%. Regardless of NHI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NHI's net profit margin of 94.27% significantly outperformed against the industry.
  • 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 on the basis of return on equity, NATIONAL HEALTH INVESTORS has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

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