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."

GEO Group

Dividend Yield: 8.80%

GEO Group (NYSE: GEO) shares currently have a dividend yield of 8.80%.

The GEO Group, Inc. provides government-outsourced services specializing in the management of correctional, detention, and re-entry facilities, and the provision of community based services and youth services in the United States, Australia, South Africa, the United Kingdom, and Canada. The company has a P/E ratio of 16.20.

The average volume for GEO Group has been 514,800 shares per day over the past 30 days. GEO Group has a market cap of $2.2 billion and is part of the real estate industry. Shares are down 25.9% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates GEO Group as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 2.6%. 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 return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, GEO GROUP INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • GEO GROUP 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, GEO GROUP INC increased its bottom line by earning $1.99 versus $1.64 in the prior year. For the next year, the market is expecting a contraction of 3.5% in earnings ($1.92 versus $1.99).
  • The change in net income 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 has decreased by 1.7% when compared to the same quarter one year ago, dropping from $38.99 million to $38.31 million.

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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 30.52.

The average volume for Chesapeake Lodging has been 377,700 shares per day over the past 30 days. Chesapeake Lodging has a market cap of $1.6 billion and is part of the real estate industry. Shares are down 25.9% 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 robust revenue growth, reasonable valuation levels and good cash flow from operations. 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 6.1%. Since the same quarter one year prior, revenues rose by 26.1%. 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 $53.14 million or 36.90% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 9.42%.
  • CHESAPEAKE LODGING TRUST's earnings per share declined by 19.2% 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 ($1.03 versus $1.01).
  • The change in net income 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 has decreased by 5.3% when compared to the same quarter one year ago, dropping from $28.69 million to $27.18 million.

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BGC Partners

Dividend Yield: 6.20%

BGC Partners (NASDAQ: BGCP) shares currently have a dividend yield of 6.20%.

BGC Partners, Inc. operates as a brokerage company in the United Kingdom, the United States, and internationally. It operates in two segments, Financial Services and Real Estate Services. The company has a P/E ratio of 53.44.

The average volume for BGC Partners has been 1,305,500 shares per day over the past 30 days. BGC Partners has a market cap of $2.0 billion and is part of the financial services industry. Shares are up 2.7% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates BGC Partners as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, good cash flow from operations, impressive record of earnings per share growth and solid stock price performance. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • BGCP's very impressive revenue growth greatly exceeded the industry average of 5.6%. Since the same quarter one year prior, revenues leaped by 57.2%. 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 Capital Markets industry. The net income increased by 432.1% when compared to the same quarter one year prior, rising from $7.21 million to $38.37 million.
  • Net operating cash flow has significantly increased by 157.89% to $133.25 million when compared to the same quarter last year. Despite an increase in cash flow of 157.89%, BGC PARTNERS INC is still growing at a significantly lower rate than the industry average of 271.57%.
  • BGC PARTNERS INC reported significant earnings per share improvement 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, BGC PARTNERS INC reported lower earnings of $0.02 versus $0.35 in the prior year. This year, the market expects an improvement in earnings ($0.74 versus $0.02).
  • After a year of stock price fluctuations, the net result is that BGCP'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. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

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