Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer

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 9.97.

The average volume for Starwood Property has been 2,491,200 shares per day over the past 30 days. Starwood Property has a market cap of $5.1 billion and is part of the real estate industry. Shares are down 6.5% year-to-date as of the close of trading on Wednesday.

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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 8.9%. Since the same quarter one year prior, revenues slightly increased by 7.5%. 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 61.67%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 65.08% significantly outperformed against the industry average.
  • Net operating cash flow has slightly increased to $114.15 million or 9.41% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -1.20%.
  • 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, STARWOOD PROPERTY TRUST INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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Medical Properties

Dividend Yield: 6.50%

Medical Properties

(NYSE:

MPW

) shares currently have a dividend yield of 6.50%.

Medical Properties Trust, Inc. operates as a real estate investment trust (REIT) in the United States. It acquires, develops, and invests in healthcare facilities; and leases healthcare facilities to healthcare operating companies and healthcare providers. The company has a P/E ratio of 32.02.

The average volume for Medical Properties has been 1,881,400 shares per day over the past 30 days. Medical Properties has a market cap of $2.8 billion and is part of the real estate industry. Shares are down 2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Medical Properties

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, good cash flow from operations, increase in net income and increase in stock price during the past year. 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 8.9%. Since the same quarter one year prior, revenues rose by 31.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for MEDICAL PROPERTIES TRUST is rather high; currently it is at 66.43%. It has increased significantly from the same period last year. Along with this, the net profit margin of 37.36% is above that of the industry average.
  • Net operating cash flow has significantly increased by 129.87% to $42.03 million when compared to the same quarter last year. In addition, MEDICAL PROPERTIES TRUST has also vastly surpassed the industry average cash flow growth rate of -1.20%.
  • 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 395.7% when compared to the same quarter one year prior, rising from $7.24 million to $35.90 million.
  • After a year of stock price fluctuations, the net result is that MPW'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. 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.

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Duke Energy Corporation

Dividend Yield: 4.50%

Duke Energy Corporation

(NYSE:

DUK

) shares currently have a dividend yield of 4.50%.

Duke Energy Corporation, together with its subsidiaries, operates as an energy company in the United States and Latin America. It operates through three segments: Regulated Utilities, International Energy, and Commercial Power. The company has a P/E ratio of 20.89.

The average volume for Duke Energy Corporation has been 3,633,900 shares per day over the past 30 days. Duke Energy Corporation has a market cap of $50.6 billion and is part of the utilities industry. Shares are down 12.5% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Duke Energy Corporation

as a

buy

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, expanding profit margins, good cash flow from operations, growth in earnings per share and reasonable valuation levels. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 990.7% when compared to the same quarter one year prior, rising from -$97.00 million to $864.00 million.
  • 37.16% is the gross profit margin for DUKE ENERGY CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.24% is above that of the industry average.
  • Net operating cash flow has slightly increased to $1,440.00 million or 4.87% when compared to the same quarter last year. Despite an increase in cash flow, DUKE ENERGY CORP's cash flow growth rate is still lower than the industry average growth rate of 16.12%.
  • DUKE ENERGY CORP'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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, DUKE ENERGY CORP increased its bottom line by earning $4.65 versus $3.63 in the prior year. This year, the market expects earnings to be in line with last year ($4.65 versus $4.65).
  • DUK, with its decline in revenue, slightly underperformed the industry average of 3.4%. Since the same quarter one year prior, revenues slightly dropped by 3.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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