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."

International Paper

Dividend Yield: 4.10%

International Paper

(NYSE:

IP

) shares currently have a dividend yield of 4.10%.

International Paper Company operates as a paper and packaging company in North America, Europe, Latin America, Russia, Asia, Africa, and the Middle East. The company operates through three segments: Industrial Packaging, Printing Papers, and Consumer Packaging. The company has a P/E ratio of 16.06.

The average volume for International Paper has been 2,925,800 shares per day over the past 30 days. International Paper has a market cap of $16.2 billion and is part of the consumer non-durables industry. Shares are down 30.1% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

International Paper

as a

buy

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, notable return on equity and growth in earnings per share. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • 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 Paper & Forest Products industry average. The net income increased by 41.0% when compared to the same quarter one year prior, rising from $161.00 million to $227.00 million.
  • 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 Paper & Forest Products industry and the overall market, INTL PAPER CO's return on equity exceeds that of both the industry average and the S&P 500.
  • INTL PAPER CO has improved earnings per share by 35.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, INTL PAPER CO reported lower earnings of $1.33 versus $3.81 in the prior year. This year, the market expects an improvement in earnings ($3.81 versus $1.33).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.8%. Since the same quarter one year prior, revenues slightly dropped by 3.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • IP has underperformed the S&P 500 Index, declining 19.89% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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KKR

Dividend Yield: 9.60%

KKR

(NYSE:

KKR

) shares currently have a dividend yield of 9.60%.

KKR & Co. L.P. is a private equity and real estate investment firm specializing in direct and fund of fund investments. It specializes in acquisitions, leveraged buyouts, management buyouts, credit special situations, growth equity, mature, mezzanine, distressed, and middle market investments. The company has a P/E ratio of 12.03.

The average volume for KKR has been 2,874,300 shares per day over the past 30 days. KKR has a market cap of $7.9 billion and is part of the financial services industry. Shares are down 28.8% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

KKR

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, increase in net income, expanding profit margins and growth in earnings per share. 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 revenue growth greatly exceeded the industry average of 6.7%. Since the same quarter one year prior, revenues rose by 48.7%. 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 Capital Markets industry. The net income increased by 111.2% when compared to the same quarter one year prior, rising from $178.22 million to $376.31 million.
  • The gross profit margin for KKR & CO LP is currently very high, coming in at 86.52%. 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 9.33% trails the industry average.
  • KKR & CO LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, KKR & CO LP reported lower earnings of $1.28 versus $2.29 in the prior year. This year, the market expects an improvement in earnings ($2.73 versus $1.28).

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Sabra Health Care REIT

Dividend Yield: 6.80%

Sabra Health Care REIT

(NASDAQ:

SBRA

) shares currently have a dividend yield of 6.80%.

Sabra Health Care REIT, Inc. operates as a real estate investment trust in the United States. The company, through its subsidiaries, owns and invests in real estate properties for the healthcare industry. The company has a P/E ratio of 19.49.

The average volume for Sabra Health Care REIT has been 381,500 shares per day over the past 30 days. Sabra Health Care REIT has a market cap of $1.6 billion and is part of the real estate industry. Shares are down 21.8% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Sabra Health Care REIT

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels, expanding profit margins, increase in net income and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 9.7%. Since the same quarter one year prior, revenues rose by 31.7%. 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.
  • SABRA HEALTH CARE REIT INC's earnings per share declined by 14.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SABRA HEALTH CARE REIT INC increased its bottom line by earning $0.69 versus $0.67 in the prior year. This year, the market expects an improvement in earnings ($1.16 versus $0.69).
  • The gross profit margin for SABRA HEALTH CARE REIT INC is rather high; currently it is at 51.70%. Regardless of SBRA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 29.75% trails the industry average.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Real Estate Investment Trusts (REITs) industry average, but is greater than that of the S&P 500. The net income increased by 13.7% when compared to the same quarter one year prior, going from $14.80 million to $16.84 million.

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