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 or Stephanie Link.

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 53.44.

The average volume for Education Realty has been 621,000 shares per day over the past 30 days. Education Realty has a market cap of $1.7 billion and is part of the real estate industry. Shares are down 5% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Education Realty as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 47.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 475.00% and other important driving factors, this stock has surged by 35.13% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • EDUCATION 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, EDUCATION REALTY TRUST INC turned its bottom line around by earning $0.15 versus -$0.03 in the prior year. This year, the market expects an improvement in earnings ($0.81 versus $0.15).
  • 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 579.6% when compared to the same quarter one year prior, rising from -$4.46 million to $21.40 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

PacWest Bancorp

Dividend Yield: 4.30%

PacWest Bancorp (NASDAQ: PACW) shares currently have a dividend yield of 4.30%.

PacWest Bancorp operates as the holding company for Pacific Western Bank that provides commercial banking products and services to individuals, professionals, and small to mid-sized businesses in the United States. It accepts demand, money market, and time deposits. The company has a P/E ratio of 24.14.

The average volume for PacWest Bancorp has been 587,900 shares per day over the past 30 days. PacWest Bancorp has a market cap of $4.8 billion and is part of the banking industry. Shares are up 1.9% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates PacWest Bancorp as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • PACW's very impressive revenue growth greatly exceeded the industry average of 4.9%. Since the same quarter one year prior, revenues leaped by 178.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • PACWEST BANCORP 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, PACWEST BANCORP increased its bottom line by earning $1.97 versus $1.08 in the prior year. This year, the market expects an improvement in earnings ($2.88 versus $1.97).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 2183.7% when compared to the same quarter one year prior, rising from $3.11 million to $71.00 million.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
  • The gross profit margin for PACWEST BANCORP is currently very high, coming in at 92.46%. Regardless of PACW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PACW's net profit margin of 31.92% compares favorably to the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

PPL

Dividend Yield: 4.20%

PPL (NYSE: PPL) shares currently have a dividend yield of 4.20%.

PPL Corporation, an energy and utility holding company, generates, transmits, distributes, and sells electricity to wholesale and retail customers in the Pennsylvania, Kentucky, Virginia, Tennessee, and the United Kingdom. The company operates in four segments: Kentucky Regulated, U.K. The company has a P/E ratio of 24.12.

The average volume for PPL has been 4,253,100 shares per day over the past 30 days. PPL has a market cap of $23.4 billion and is part of the utilities industry. Shares are down 4.6% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates PPL as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, compelling growth in net income, good cash flow from operations and notable return on equity. We feel these 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 revenue growth came in higher than the industry average of 12.3%. Since the same quarter one year prior, revenues rose by 41.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
  • 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 809.2% when compared to the same quarter one year prior, rising from -$98.00 million to $695.00 million.
  • Net operating cash flow has increased to $775.00 million or 22.23% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -6.44%.
  • 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 Electric Utilities industry and the overall market on the basis of return on equity, PPL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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