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."

Education Realty

Dividend Yield: 4.10%

Education Realty

(NYSE:

EDR

) shares currently have a dividend yield of 4.10%.

EdR is a real estate investment trust. The firm invests in the real estate markets of United States. It invests collegiate housing communities. The firm develops, acquires, owns, and manages collegiate housing communities located near university campuses. The company has a P/E ratio of 59.49.

The average volume for Education Realty has been 515,400 shares per day over the past 30 days. Education Realty has a market cap of $1.8 billion and is part of the real estate industry. Shares are down 1.8% year-to-date as of the close of trading on Monday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreet Ratings rates

Education Realty

as a

buy

. Among the primary strengths of the company is its 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:

  • EDR, with its decline in revenue, underperformed when compared the industry average of 6.1%. Since the same quarter one year prior, revenues slightly dropped by 9.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • After a year of stock price fluctuations, the net result is that EDR'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. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • EDUCATION REALTY TRUST INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, EDUCATION REALTY TRUST INC increased its bottom line by earning $0.98 versus $0.15 in the prior year. For the next year, the market is expecting a contraction of 63.3% in earnings ($0.36 versus $0.98).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 122.1% when compared to the same quarter one year ago, falling from $21.40 million to -$4.72 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, EDUCATION REALTY TRUST INC's return on equity significantly trails that of both the industry average and the S&P 500.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

Hawaiian Electric Industries

Dividend Yield: 4.40%

Hawaiian Electric Industries

(NYSE:

HE

) shares currently have a dividend yield of 4.40%.

Hawaiian Electric Industries, Inc., through its subsidiaries, engages in the electric utility and banking businesses primarily in the State of Hawaii. The company is involved in the production, purchase, transmission, distribution, and sale of electricity. The company has a P/E ratio of 19.65.

The average volume for Hawaiian Electric Industries has been 318,400 shares per day over the past 30 days. Hawaiian Electric Industries has a market cap of $3.0 billion and is part of the utilities industry. Shares are down 14.9% year-to-date as of the close of trading on Monday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreet Ratings rates

Hawaiian Electric Industries

as a

buy

. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Electric Utilities industry average. The net income increased by 5.9% when compared to the same quarter one year prior, going from $48.28 million to $51.14 million.
  • HE, with its decline in revenue, underperformed when compared the industry average of 0.8%. Since the same quarter one year prior, revenues fell by 17.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Even though the current debt-to-equity ratio is 1.05, it is still below the industry average, suggesting that this level of debt is acceptable within the Electric Utilities industry.
  • HAWAIIAN ELECTRIC INDS's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, HAWAIIAN ELECTRIC INDS increased its bottom line by earning $1.64 versus $1.62 in the prior year. For the next year, the market is expecting a contraction of 0.5% in earnings ($1.63 versus $1.64).
  • After a year of stock price fluctuations, the net result is that HE'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. Despite the stock's decline during the last year, it is still somewhat more expensive (in proportion to its earnings over the last year) than most other stocks in its industry. We feel, however, that other strengths this company displays offset this slight negative.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

National Health Investors

Dividend Yield: 5.70%

National Health Investors

(NYSE:

NHI

) shares currently have a dividend yield of 5.70%.

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 18.11.

The average volume for National Health Investors has been 242,900 shares per day over the past 30 days. National Health Investors has a market cap of $2.3 billion and is part of the real estate industry. Shares are down 13.9% year-to-date as of the close of trading on Monday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

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, growth in earnings per share, compelling growth in net income, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 30.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • NATIONAL HEALTH INVESTORS has improved earnings per share by 17.1% 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, NATIONAL HEALTH INVESTORS increased its bottom line by earning $3.03 versus $2.76 in the prior year. This year, the market expects an improvement in earnings ($3.35 versus $3.03).
  • 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 33.0% when compared to the same quarter one year prior, rising from $25.25 million to $33.60 million.
  • Net operating cash flow has increased to $40.80 million or 29.13% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 9.41%.
  • The gross profit margin for NATIONAL HEALTH INVESTORS is currently very high, coming in at 76.57%. 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 57.90% significantly outperformed against the industry.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

Other helpful dividend tools from TheStreet: