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."

Valley National Bancorp

Dividend Yield: 4.10%

Valley National Bancorp (NYSE: VLY) shares currently have a dividend yield of 4.10%.

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 20.85.

The average volume for Valley National Bancorp has been 1,757,400 shares per day over the past 30 days. Valley National Bancorp has a market cap of $2.5 billion and is part of the banking industry. Shares are up 10.2% year-to-date as of the close of trading on Thursday.

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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, solid stock price performance and growth in earnings per share. 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 0.9%. Since the same quarter one year prior, revenues rose by 14.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Commercial Banks industry average. The net income increased by 29.9% when compared to the same quarter one year prior, rising from $27.68 million to $35.95 million.
  • The gross profit margin for VALLEY NATIONAL BANCORP is currently very high, coming in at 79.13%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, VLY's net profit margin of 18.38% significantly trails the industry average.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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 has improved earnings per share by 7.1% 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, VALLEY NATIONAL BANCORP reported lower earnings of $0.57 versus $0.67 in the prior year. This year, the market expects earnings to be in line with last year ($0.57 versus $0.57).

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Ryanair Holdings

Dividend Yield: 4.30%

Ryanair Holdings (NASDAQ: RYAAY) shares currently have a dividend yield of 4.30%.

Ryanair Holdings plc, together with its subsidiaries, provides scheduled-passenger airline services in Ireland, the United Kingdom, continental Europe, and Morocco. The company has a P/E ratio of 29.89.

The average volume for Ryanair Holdings has been 446,700 shares per day over the past 30 days. Ryanair Holdings has a market cap of $20.6 billion and is part of the transportation industry. Shares are up 7.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Ryanair Holdings as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, expanding profit margins 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 revenue growth came in higher than the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 10.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.93, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, RYAAY has a quick ratio of 1.86, which demonstrates the ability of the company to cover short-term liquidity needs.
  • RYANAIR HOLDINGS PLC 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 two years. We feel that this trend should continue. During the past fiscal year, RYANAIR HOLDINGS PLC increased its bottom line by earning $3.44 versus $2.56 in the prior year. This year, the market expects an improvement in earnings ($5.11 versus $3.44).
  • 48.37% is the gross profit margin for RYANAIR HOLDINGS PLC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 48.59% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 128.01% to $307.51 million when compared to the same quarter last year. Despite an increase in cash flow, RYANAIR HOLDINGS PLC's average is still marginally south of the industry average growth rate of 136.79%.

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RR Donnelley & Sons

Dividend Yield: 6.40%

RR Donnelley & Sons (NASDAQ: RRD) shares currently have a dividend yield of 6.40%.

R.R. Donnelley & Sons Company provides integrated communications solutions to private and public sector clients in the United States and internationally. The company operates through Publishing and Retail Services, Variable Print, Strategic Services, and International segments. The company has a P/E ratio of 33.06.

The average volume for RR Donnelley & Sons has been 1,456,900 shares per day over the past 30 days. RR Donnelley & Sons has a market cap of $3.4 billion and is part of the diversified services industry. Shares are down 5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates RR Donnelley & Sons as a buy. The company's strongest point has been its expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.8%. Since the same quarter one year prior, revenues slightly dropped by 4.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • DONNELLEY (R R) & SONS CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, DONNELLEY (R R) & SONS CO reported lower earnings of $0.58 versus $1.15 in the prior year. This year, the market expects an improvement in earnings ($1.50 versus $0.58).
  • The gross profit margin for DONNELLEY (R R) & SONS CO is rather low; currently it is at 22.16%. Regardless of RRD's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.50% trails the industry average.
  • After a year of stock price fluctuations, the net result is that RRD'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. Despite the stock's decline during the last year, it is still somewhat more expensive (in proportion to its earnings over the last year) than most other stocks in its industry. We feel, however, that other strengths this company displays offset this slight negative.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Commercial Services & Supplies industry and the overall market on the basis of return on equity, DONNELLEY (R R) & SONS CO has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

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