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."

Lamar Advertising

Dividend Yield: 4.80%

Lamar Advertising (NASDAQ: LAMR) shares currently have a dividend yield of 4.80%.

Lamar Advertising Company is a publicly owned equity real estate investment trust. The firm primarily engages in selling advertising space on billboards, buses, shelters, benches, and logo plates. Lamar Advertising Company was founded in 1902 and is headquartered in Baton Rouge, Louisiana. The company has a P/E ratio of 15.85.

The average volume for Lamar Advertising has been 633,100 shares per day over the past 30 days. Lamar Advertising has a market cap of $4.7 billion and is part of the real estate industry. Shares are up 6.1% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Lamar Advertising as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, notable return on equity, solid stock price performance and good cash flow from operations. 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:
  • 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 284.9% when compared to the same quarter one year prior, rising from $15.42 million to $59.36 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.8%. Since the same quarter one year prior, revenues slightly increased by 4.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, LAMAR ADVERTISING CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • Net operating cash flow has increased to $133.49 million or 20.42% when compared to the same quarter last year. In addition, LAMAR ADVERTISING CO has also modestly surpassed the industry average cash flow growth rate of 13.29%.

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Digital Realty

Dividend Yield: 4.60%

Digital Realty (NYSE: DLR) shares currently have a dividend yield of 4.60%.

Digital Realty Trust, Inc., a real estate investment trust (REIT), through its controlling interest in Digital Realty Trust, L.P., engages in the ownership, acquisition, development, redevelopment, and management of technology-related real estate. The company has a P/E ratio of 36.15.

The average volume for Digital Realty has been 1,263,000 shares per day over the past 30 days. Digital Realty has a market cap of $10.0 billion and is part of the real estate industry. Shares are up 10.7% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Digital Realty as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, revenue growth, reasonable valuation levels and good cash flow from operations. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • 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 Real Estate Investment Trusts (REITs) industry. The net income increased by 124.6% when compared to the same quarter one year prior, rising from $60.34 million to $135.51 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.8%. Since the same quarter one year prior, revenues slightly increased by 4.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has slightly increased to $216.23 million or 8.73% when compared to the same quarter last year. Despite an increase in cash flow, DIGITAL REALTY TRUST INC's average is still marginally south of the industry average growth rate of 13.29%.

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Valley National Bancorp

Dividend Yield: 4.30%

Valley National Bancorp (NYSE: VLY) shares currently have a dividend yield of 4.30%.

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 20.02.

The average volume for Valley National Bancorp has been 1,678,700 shares per day over the past 30 days. Valley National Bancorp has a market cap of $2.4 billion and is part of the banking industry. Shares are up 5.2% year-to-date as of the close of trading on Monday.

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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 increase in stock price during the past year. 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 3.6%. 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.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
  • VALLEY NATIONAL BANCORP's earnings per share declined by 6.7% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, VALLEY NATIONAL BANCORP reported lower earnings of $0.57 versus $0.67 in the prior year. For the next year, the market is expecting a contraction of 0.9% in earnings ($0.57 versus $0.57).

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