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."

Starwood Property

Dividend Yield: 8.90%

Starwood Property

(NYSE:

STWD

) shares currently have a dividend yield of 8.90%.

Starwood Property Trust, Inc. originates, acquires, finances, and manages commercial mortgage loans, other commercial real estate debt investments, commercial mortgage-backed securities, and other commercial real estate-related debt investments in the United States and Europe. The company has a P/E ratio of 10.09.

The average volume for Starwood Property has been 2,181,500 shares per day over the past 30 days. Starwood Property has a market cap of $5.2 billion and is part of the real estate industry. Shares are down 7.9% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Starwood Property

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, expanding profit margins, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.7%. Since the same quarter one year prior, revenues slightly increased by 4.0%. 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 gross profit margin for STARWOOD PROPERTY TRUST INC is rather high; currently it is at 57.58%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 62.44% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $180.81 million or 43.36% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 16.13%.
  • 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, STARWOOD PROPERTY TRUST INC's return on equity is below that of both the industry average and the S&P 500.

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Lamar Advertising

Dividend Yield: 5.20%

Lamar Advertising

(NASDAQ:

LAMR

) shares currently have a dividend yield of 5.20%.

Lamar Advertising Company is a publicly owned equity real estate investment trust. The firm primarily engages in selling advertising space on billboards, buses, shelters, benches, and logo plates. Lamar Advertising Company was founded in 1902 and is headquartered in Baton Rouge, Louisiana. The company has a P/E ratio of 14.79.

The average volume for Lamar Advertising has been 610,000 shares per day over the past 30 days. Lamar Advertising has a market cap of $4.4 billion and is part of the real estate industry. Shares are down 1.2% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Lamar Advertising

as a

buy

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, notable return on equity, solid stock price performance and good cash flow from operations. 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 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 284.9% when compared to the same quarter one year prior, rising from $15.42 million to $59.36 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.7%. Since the same quarter one year prior, revenues slightly increased by 4.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, LAMAR ADVERTISING CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 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, 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.
  • Net operating cash flow has increased to $133.49 million or 20.42% when compared to the same quarter last year. In addition, LAMAR ADVERTISING CO has also modestly surpassed the industry average cash flow growth rate of 16.13%.

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W P Carey

Dividend Yield: 6.50%

W P Carey

(NYSE:

WPC

) shares currently have a dividend yield of 6.50%.

W. P. Carey Inc. is an independent equity real estate investment trust. The firm also provides long-term sale-leaseback and build-to-suit financing for companies. It invests in the real estate markets across the globe. The company has a P/E ratio of 40.44.

The average volume for W P Carey has been 375,700 shares per day over the past 30 days. W P Carey has a market cap of $6.2 billion and is part of the real estate industry. Shares are down 16% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

W P Carey

as a

buy

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations, expanding profit margins and growth in earnings per share. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Net operating cash flow has increased to $148.68 million or 18.99% when compared to the same quarter last year. In addition, W P CAREY INC has also modestly surpassed the industry average cash flow growth rate of 16.13%.
  • The gross profit margin for W P CAREY INC is currently very high, coming in at 88.36%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 26.60% trails the industry average.
  • W P CAREY 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, W P CAREY INC increased its bottom line by earning $2.15 versus $1.21 in the prior year. For the next year, the market is expecting a contraction of 8.8% in earnings ($1.96 versus $2.15).
  • WPC, with its decline in revenue, underperformed when compared the industry average of 9.7%. Since the same quarter one year prior, revenues slightly dropped by 6.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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