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."

New York Community Bancorp

Dividend Yield: 6.20%

New York Community Bancorp (NYSE: NYCB) shares currently have a dividend yield of 6.20%.

New York Community Bancorp, Inc. operates as a holding company for New York Community Bank and New York Commercial Bank that offer banking products and financial services in New York, New Jersey, Florida, Ohio, and Arizona. The company has a P/E ratio of 14.83.

The average volume for New York Community Bancorp has been 4,857,100 shares per day over the past 30 days. New York Community Bancorp has a market cap of $7.8 billion and is part of the banking industry. Shares are up 2.5% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates New York Community Bancorp as a buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins, solid stock price performance 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:
  • The gross profit margin for NEW YORK CMNTY BANCORP INC is currently very high, coming in at 71.79%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 25.25% trails the industry average.
  • After a year of stock price fluctuations, the net result is that NYCB'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.
  • Despite the weak revenue results, NYCB has outperformed against the industry average of 15.3%. Since the same quarter one year prior, revenues slightly dropped by 3.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • NEW YORK CMNTY BANCORP 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, NEW YORK CMNTY BANCORP INC increased its bottom line by earning $1.10 versus $1.08 in the prior year. For the next year, the market is expecting a contraction of 1.8% in earnings ($1.08 versus $1.10).

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Dupont Fabros Technology

Dividend Yield: 5.10%

Dupont Fabros Technology (NYSE: DFT) shares currently have a dividend yield of 5.10%.

DuPont Fabros Technology, Inc., a real estate investment trust (REIT), engages in the ownership, acquisition, development, operation, management, and lease of large-scale data center facilities in the United States. The company has a P/E ratio of 30.27.

The average volume for Dupont Fabros Technology has been 657,000 shares per day over the past 30 days. Dupont Fabros Technology has a market cap of $2.2 billion and is part of the real estate industry. Shares are down 0.6% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Dupont Fabros Technology 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, increase in net income and solid stock price performance. 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:
  • DFT's revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 9.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Net operating cash flow has increased to $63.91 million or 20.15% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 9.42%.
  • The net income growth from the same quarter one year ago has 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 0.4% when compared to the same quarter one year prior, going from $25.77 million to $25.87 million.
  • After a year of stock price fluctuations, the net result is that DFT'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.

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Pepco Holdings

Dividend Yield: 4.30%

Pepco Holdings (NYSE: POM) shares currently have a dividend yield of 4.30%.

Pepco Holdings, Inc., through its subsidiaries, engages in the transmission, distribution, and supply of electricity. The company also distributes and supplies natural gas. The company has a P/E ratio of 27.47.

The average volume for Pepco Holdings has been 2,190,900 shares per day over the past 30 days. Pepco Holdings has a market cap of $6.4 billion and is part of the utilities industry. Shares are down 4.7% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Pepco Holdings as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share 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:
  • POM's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 3.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • PEPCO HOLDINGS INC has improved earnings per share by 16.1% 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, PEPCO HOLDINGS INC increased its bottom line by earning $0.96 versus $0.41 in the prior year. This year, the market expects an improvement in earnings ($1.20 versus $0.96).
  • 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 Electric Utilities industry average. The net income increased by 15.2% when compared to the same quarter one year prior, going from $79.00 million to $91.00 million.
  • POM has underperformed the S&P 500 Index, declining 6.67% from its price level of one year ago. Despite the decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.
  • The debt-to-equity ratio of 1.43 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, POM has a quick ratio of 0.53, this demonstrates the lack of ability of the company to cover short-term liquidity needs.

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