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."

LTC Properties

Dividend Yield: 4.90%

LTC Properties (NYSE: LTC) shares currently have a dividend yield of 4.90%.

LTC Properties, Inc. operates as a health care real estate investment trust (REIT) in the United States. The company has a P/E ratio of 22.27.

The average volume for LTC Properties has been 206,000 shares per day over the past 30 days. LTC Properties has a market cap of $1.6 billion and is part of the real estate industry. Shares are up 0.6% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates LTC Properties as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, solid stock price performance, 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:
  • LTC's revenue growth has slightly outpaced the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 10.8%. 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 LTC PROPERTIES INC is currently very high, coming in at 78.46%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 55.35% significantly outperformed against the industry average.
  • LTC PROPERTIES INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, LTC PROPERTIES INC increased its bottom line by earning $1.99 versus $1.56 in the prior year. This year, the market expects an improvement in earnings ($2.02 versus $1.99).
  • Net operating cash flow has slightly increased to $26.10 million or 2.70% when compared to the same quarter last year. Despite an increase in cash flow, LTC PROPERTIES INC's cash flow growth rate is still lower than the industry average growth rate of 13.29%.
  • 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, despite the company's weak earnings results. 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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Ship Finance International

Dividend Yield: 10.30%

Ship Finance International (NYSE: SFL) shares currently have a dividend yield of 10.30%.

Ship Finance International Limited owns and operates vessels and offshore related assets in Bermuda, Cyprus, Malta, Liberia, Norway, Singapore, the United Kingdom, and the Marshall Islands. It is also involved in the charter, purchase, and sale of assets. The company has a P/E ratio of 17.31.

The average volume for Ship Finance International has been 724,600 shares per day over the past 30 days. Ship Finance International has a market cap of $1.6 billion and is part of the transportation industry. Shares are up 19.1% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Ship Finance International 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, expanding profit margins and good cash flow from operations. 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 revenue growth greatly exceeded the industry average of 34.1%. Since the same quarter one year prior, revenues rose by 26.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SHIP FINANCE INTL LTD 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 year. We feel that this trend should continue. During the past fiscal year, SHIP FINANCE INTL LTD increased its bottom line by earning $1.25 versus $1.01 in the prior year. This year, the market expects an improvement in earnings ($2.31 versus $1.25).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 203.9% when compared to the same quarter one year prior, rising from $22.36 million to $67.94 million.
  • The gross profit margin for SHIP FINANCE INTL LTD is currently very high, coming in at 71.74%. It has increased significantly from the same period last year. Along with this, the net profit margin of 73.83% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 90.03% to $38.04 million when compared to the same quarter last year. In addition, SHIP FINANCE INTL LTD has also vastly surpassed the industry average cash flow growth rate of -19.46%.

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GlaxoSmithKline

Dividend Yield: 5.50%

GlaxoSmithKline (NYSE: GSK) shares currently have a dividend yield of 5.50%.

GlaxoSmithKline plc creates, discovers, develops, manufactures, and markets pharmaceutical products, including vaccines, over-the-counter medicines, and health-related consumer products worldwide. The company has a P/E ratio of 14.46.

The average volume for GlaxoSmithKline has been 3,771,500 shares per day over the past 30 days. GlaxoSmithKline has a market cap of $91.3 billion and is part of the drugs industry. Shares are down 2.3% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates GlaxoSmithKline as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and expanding profit margins. 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:
  • GSK's revenue growth has slightly outpaced the industry average of 6.2%. Since the same quarter one year prior, revenues slightly increased by 1.8%. 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 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 Pharmaceuticals industry and the overall market, GLAXOSMITHKLINE PLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for GLAXOSMITHKLINE PLC is rather high; currently it is at 68.33%. Regardless of GSK'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 9.23% trails the industry average.
  • GLAXOSMITHKLINE PLC's earnings per share declined by 20.8% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, GLAXOSMITHKLINE PLC reported lower earnings of $1.77 versus $3.68 in the prior year. This year, the market expects an improvement in earnings ($78.31 versus $1.77).
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Pharmaceuticals industry average. The net income has decreased by 17.7% when compared to the same quarter one year ago, dropping from $1,147.39 million to $943.74 million.

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