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."

Healthcare Realty

Dividend Yield: 4.50%

Healthcare Realty

(NYSE:

HR

) shares currently have a dividend yield of 4.50%.

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 54.76.

The average volume for Healthcare Realty has been 920,400 shares per day over the past 30 days. Healthcare Realty has a market cap of $2.7 billion and is part of the real estate industry. Shares are down 2.3% 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 impressive record of earnings per share growth, compelling growth in net income, revenue growth, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • 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. We feel that this trend should continue. During the past fiscal year, HEALTHCARE REALTY TRUST INC turned its bottom line around by earning $0.34 versus -$0.16 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus $0.34).
  • 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 588.5% when compared to the same quarter one year prior, rising from $3.99 million to $27.48 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 3.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has significantly increased by 72.16% to $45.52 million when compared to the same quarter last year. In addition, HEALTHCARE REALTY TRUST INC has also vastly surpassed the industry average cash flow growth rate of 9.44%.
  • After a year of stock price fluctuations, the net result is that HR's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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.

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Hospitality Properties

Dividend Yield: 7.40%

Hospitality Properties

(NYSE:

HPT

) shares currently have a dividend yield of 7.40%.

Hospitality Properties Trust, a real estate investment trust (REIT), engages in buying, owning, and leasing hotels. The company has a P/E ratio of 18.46.

The average volume for Hospitality Properties has been 937,700 shares per day over the past 30 days. Hospitality Properties has a market cap of $4.1 billion and is part of the real estate industry. Shares are down 12% 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 revenue growth, impressive record of earnings per share growth, compelling growth in net income, reasonable valuation levels and good cash flow from operations. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • HPT's revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 11.4%. 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 27.6% 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, HOSPITALITY PROPERTIES TRUST increased its bottom line by earning $1.18 versus $0.73 in the prior year. This year, the market expects an improvement in earnings ($1.61 versus $1.18).
  • 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 24.4% when compared to the same quarter one year prior, going from $49.20 million to $61.19 million.
  • Net operating cash flow has increased to $122.85 million or 12.24% when compared to the same quarter last year. In addition, HOSPITALITY PROPERTIES TRUST has also modestly surpassed the industry average cash flow growth rate of 9.44%.

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PPL

Dividend Yield: 4.40%

PPL

(NYSE:

PPL

) shares currently have a dividend yield of 4.40%.

PPL Corporation, a utility company, delivers electricity and natural gas in the United States and the United Kingdom. It serves 321,000 natural gas and 397,000 electric customers in Louisville and 16 surrounding counties; and 543,000 customers in 77 Kentucky counties and 5 counties in Virginia. The company has a P/E ratio of 13.02.

The average volume for PPL has been 4,801,500 shares per day over the past 30 days. PPL has a market cap of $22.9 billion and is part of the utilities industry. Shares are down 6.6% 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, solid stock price performance and expanding profit margins. 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 company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. 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.
  • After a year of stock price fluctuations, the net result is that PPL's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 0.8%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 48.62% is the gross profit margin for PPL CORP which we consider to be strong. Regardless of PPL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PPL's net profit margin of 20.92% compares favorably to the industry average.
  • PPL CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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 $1.69 in the prior year. For the next year, the market is expecting a contraction of 7.6% in earnings ($2.20 versus $2.38).

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