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."

Valley National Bancorp

Dividend Yield: 4.60%

Valley National Bancorp (NYSE: VLY) shares currently have a dividend yield of 4.60%.

Valley National Bancorp operates as the holding company for the Valley National Bank that provides commercial, retail, insurance, and wealth management financial services products. The company operates through Commercial Lending, Consumer Lending, and Investment Management segments. The company has a P/E ratio of 18.75.

The average volume for Valley National Bancorp has been 1,530,900 shares per day over the past 30 days. Valley National Bancorp has a market cap of $2.2 billion and is part of the banking industry. Shares are down 2.9% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Valley National Bancorp as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, expanding profit margins and reasonable valuation levels. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 1.2%. Since the same quarter one year prior, revenues rose by 15.5%. 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 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 Commercial Banks industry average. The net income increased by 8.4% when compared to the same quarter one year prior, going from $29.52 million to $31.99 million.
  • The gross profit margin for VALLEY NATIONAL BANCORP is currently very high, coming in at 77.51%. Regardless of VLY'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 16.32% trails the industry average.
  • After a year of stock price fluctuations, the net result is that VLY'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.

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National Retail Properties

Dividend Yield: 4.80%

National Retail Properties (NYSE: NNN) shares currently have a dividend yield of 4.80%.

National Retail Properties, Inc. is a publicly owned equity real estate investment trust. The firm acquires, owns, manages, and develops retail properties in the United States. The company has a P/E ratio of 28.34.

The average volume for National Retail Properties has been 1,337,200 shares per day over the past 30 days. National Retail Properties has a market cap of $4.9 billion and is part of the real estate industry. Shares are down 7.2% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates National Retail Properties as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, solid stock price performance, expanding profit margins and increase in net income. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • NNN's revenue growth has slightly outpaced the industry average of 9.7%. Since the same quarter one year prior, revenues rose by 10.9%. 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.
  • Net operating cash flow has increased to $70.69 million or 21.01% when compared to the same quarter last year. In addition, NATIONAL RETAIL PROPERTIES has also modestly surpassed the industry average cash flow growth rate of 16.11%.
  • After a year of stock price fluctuations, the net result is that NNN'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.
  • The gross profit margin for NATIONAL RETAIL PROPERTIES is rather high; currently it is at 57.44%. Regardless of NNN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NNN's net profit margin of 39.39% compares favorably to 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 1.4% when compared to the same quarter one year prior, going from $45.57 million to $46.19 million.

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Domtar

Dividend Yield: 4.10%

Domtar (NYSE: UFS) shares currently have a dividend yield of 4.10%.

Domtar Corporation designs, manufactures, markets, and distributes communications papers, specialty and packaging papers, and absorbent hygiene products in the United States, Canada, Europe, Asia, and internationally. It operates in two segments, Pulp and Paper, and Personal Care. The company has a P/E ratio of 5.94.

The average volume for Domtar has been 644,500 shares per day over the past 30 days. Domtar has a market cap of $2.5 billion and is part of the consumer non-durables industry. Shares are down 5.1% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Domtar as a buy. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations, solid stock price performance, largely solid financial position with reasonable debt levels by most measures 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:
  • Net operating cash flow has increased to $122.00 million or 17.30% when compared to the same quarter last year. In addition, DOMTAR CORP has also vastly surpassed the industry average cash flow growth rate of -69.20%.
  • After a year of stock price fluctuations, the net result is that UFS'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.
  • The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.96 is somewhat weak and could be cause for future problems.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Paper & Forest Products industry and the overall market on the basis of return on equity, DOMTAR CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

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