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."

PacWest Bancorp

Dividend Yield: 4.70%

PacWest Bancorp (NASDAQ: PACW) shares currently have a dividend yield of 4.70%.

PacWest Bancorp operates as the holding company for Pacific Western Bank that provides commercial banking products and services to individuals, professionals, and small to mid-sized businesses in the United States. It accepts demand, money market, and time deposits. The company has a P/E ratio of 14.56.

The average volume for PacWest Bancorp has been 808,100 shares per day over the past 30 days. PacWest Bancorp has a market cap of $5.2 billion and is part of the banking industry. Shares are down 4.8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates PacWest Bancorp as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • PACW's revenue growth has slightly outpaced the industry average of 1.3%. Since the same quarter one year prior, revenues slightly increased by 2.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • PACWEST BANCORP has improved earnings per share by 13.3% 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, PACWEST BANCORP increased its bottom line by earning $1.97 versus $1.08 in the prior year. This year, the market expects an improvement in earnings ($2.87 versus $1.97).
  • 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 Commercial Banks industry average. The net income increased by 11.8% when compared to the same quarter one year prior, going from $62.27 million to $69.62 million.
  • Net operating cash flow has increased to $124.28 million or 28.59% when compared to the same quarter last year. Despite an increase in cash flow of 28.59%, PACWEST BANCORP is still growing at a significantly lower rate than the industry average of 299.35%.
  • The gross profit margin for PACWEST BANCORP is currently very high, coming in at 89.30%. Regardless of PACW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PACW's net profit margin of 31.15% compares favorably to the industry average.

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Eaton

Dividend Yield: 4.30%

Eaton (NYSE: ETN) shares currently have a dividend yield of 4.30%.

Eaton Corporation plc operates as a power management company worldwide. The company has a P/E ratio of 11.77.

The average volume for Eaton has been 4,183,500 shares per day over the past 30 days. Eaton has a market cap of $23.5 billion and is part of the industrial industry. Shares are down 23.8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Eaton as a buy. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, notable return on equity and 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:
  • Net operating cash flow has significantly increased by 236.67% to $973.00 million when compared to the same quarter last year. In addition, EATON CORP PLC has also vastly surpassed the industry average cash flow growth rate of -2.70%.
  • The current debt-to-equity ratio, 0.56, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.83 is somewhat weak and could be cause for future problems.
  • 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 Electrical Equipment industry and the overall market on the basis of return on equity, EATON CORP PLC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • 35.33% is the gross profit margin for EATON CORP PLC which we consider to be strong. Regardless of ETN'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 8.57% trails the industry average.

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Spectra Energy Partners

Dividend Yield: 5.90%

Spectra Energy Partners (NYSE: SEP) shares currently have a dividend yield of 5.90%.

Spectra Energy Partners, LP operates as an investment arm of Spectra Energy Corp. The company has a P/E ratio of 13.06.

The average volume for Spectra Energy Partners has been 575,100 shares per day over the past 30 days. Spectra Energy Partners has a market cap of $12.9 billion and is part of the energy industry. Shares are down 24.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Spectra Energy Partners as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations, increase in net income and growth in earnings per share. 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 greatly exceeded the industry average of 36.9%. Since the same quarter one year prior, revenues slightly increased by 9.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for SPECTRA ENERGY PARTNERS LP is rather high; currently it is at 64.22%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 52.45% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $399.00 million or 28.70% when compared to the same quarter last year. In addition, SPECTRA ENERGY PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -26.70%.
  • 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 21.6% when compared to the same quarter one year prior, going from $264.00 million to $321.00 million.
  • SPECTRA ENERGY PARTNERS LP has improved earnings per share by 42.7% 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, SPECTRA ENERGY PARTNERS LP reported lower earnings of $2.84 versus $7.16 in the prior year. This year, the market expects an improvement in earnings ($3.19 versus $2.84).

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