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."

Medical Properties

Dividend Yield: 7.70%

Medical Properties (NYSE: MPW) shares currently have a dividend yield of 7.70%.

Medical Properties Trust, Inc. operates as a real estate investment trust (REIT) in the United States. It acquires, develops, and invests in healthcare facilities; and leases healthcare facilities to healthcare operating companies and healthcare providers. The company has a P/E ratio of 21.58.

The average volume for Medical Properties has been 3,343,600 shares per day over the past 30 days. Medical Properties has a market cap of $2.4 billion and is part of the real estate industry. Shares are down 18.1% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Medical Properties as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels, compelling growth in net income, good cash flow from operations and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 31.6%. 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 Real Estate Investment Trusts (REITs) industry. The net income increased by 11137.9% when compared to the same quarter one year prior, rising from -$0.20 million to $22.41 million.
  • Net operating cash flow has increased to $45.42 million or 42.05% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 13.29%.
  • The gross profit margin for MEDICAL PROPERTIES TRUST is currently very high, coming in at 84.77%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 22.04% trails the industry average.

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Main Street Capital Corporation

Dividend Yield: 7.10%

Main Street Capital Corporation (NYSE: MAIN) shares currently have a dividend yield of 7.10%.

Main Street Capital Corporation is a business development company specializing in long- term equity and debt investments in small and lower middle market companies. The company has a P/E ratio of 12.53.

The average volume for Main Street Capital Corporation has been 309,400 shares per day over the past 30 days. Main Street Capital Corporation has a market cap of $1.5 billion and is part of the financial services industry. Shares are up 2.1% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Main Street Capital Corporation as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, good cash flow from operations and increase in net income. 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 came in higher than the industry average of 5.1%. Since the same quarter one year prior, revenues rose by 18.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for MAIN STREET CAPITAL CORP is currently very high, coming in at 84.39%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 98.77% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 94.45% to -$6.63 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 65.52%.
  • 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 36.2% when compared to the same quarter one year prior, rising from $29.95 million to $40.80 million.
  • MAIN STREET CAPITAL CORP has improved earnings per share by 20.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MAIN STREET CAPITAL CORP reported lower earnings of $2.33 versus $2.66 in the prior year. For the next year, the market is expecting a contraction of 6.7% in earnings ($2.18 versus $2.33).

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Chesapeake Lodging

Dividend Yield: 5.80%

Chesapeake Lodging (NYSE: CHSP) shares currently have a dividend yield of 5.80%.

Chesapeake Lodging Trust is a self-advised real estate investment trust organized in the state of Maryland in June 2009. The company focuses on investments primarily in upper-upscale hotels in major business and convention markets and premium select-service hotels in urban settings or unique locations in the United States. The company has a P/E ratio of 28.08.

The average volume for Chesapeake Lodging has been 353,100 shares per day over the past 30 days. Chesapeake Lodging has a market cap of $1.7 billion and is part of the real estate industry. Shares are down 26.8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Chesapeake Lodging as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations and increase in net income. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 25.8%. 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 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 Real Estate Investment Trusts (REITs) industry average. The net income increased by 13.2% when compared to the same quarter one year prior, going from $21.25 million to $24.05 million.
  • Net operating cash flow has increased to $48.99 million or 34.18% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 13.29%.
  • CHESAPEAKE LODGING TRUST's earnings per share declined by 5.3% 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, CHESAPEAKE LODGING TRUST increased its bottom line by earning $1.01 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($1.11 versus $1.01).

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