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."

National Retail Properties

Dividend Yield: 4.40%

National Retail Properties (NYSE: NNN) shares currently have a dividend yield of 4.40%.

National Retail Properties, Inc. is a publicly owned equity real estate investment trust. The firm acquires, owns, manages, and develops retail properties in the United States. The company has a P/E ratio of 30.32.

The average volume for National Retail Properties has been 1,212,600 shares per day over the past 30 days. National Retail Properties has a market cap of $5.4 billion and is part of the real estate industry. Shares are down 2.3% year-to-date as of the close of trading on Wednesday.

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

Highlights from the ratings report include:
  • NNN's revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 12.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • NATIONAL RETAIL PROPERTIES has improved earnings per share by 9.7% 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, NATIONAL RETAIL PROPERTIES increased its bottom line by earning $1.24 versus $1.06 in the prior year. This year, the market expects an improvement in earnings ($1.28 versus $1.24).
  • 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 Real Estate Investment Trusts (REITs) industry average. The net income increased by 15.1% when compared to the same quarter one year prior, going from $47.94 million to $55.20 million.
  • The gross profit margin for NATIONAL RETAIL PROPERTIES is rather high; currently it is at 68.79%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 44.81% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $110.15 million or 16.27% when compared to the same quarter last year. In addition, NATIONAL RETAIL PROPERTIES has also modestly surpassed the industry average cash flow growth rate of 9.45%.

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Ares Capital

Dividend Yield: 10.90%

Ares Capital (NASDAQ: ARCC) shares currently have a dividend yield of 10.90%.

Ares Capital Corporation is a business development company specializing in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies. It also makes growth capital and general refinancing. The company has a P/E ratio of 8.47.

The average volume for Ares Capital has been 1,663,600 shares per day over the past 30 days. Ares Capital has a market cap of $4.4 billion and is part of the financial services industry. Shares are down 4.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Ares Capital as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • ARCC's revenue growth has slightly outpaced the industry average of 5.5%. Since the same quarter one year prior, revenues slightly increased by 3.0%. 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 gross profit margin for ARES CAPITAL CORP is currently very high, coming in at 72.04%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 44.78% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 101.17% to $6.76 million when compared to the same quarter last year. Despite an increase in cash flow of 101.17%, ARES CAPITAL CORP is still growing at a significantly lower rate than the industry average of 279.75%.
  • ARES CAPITAL CORP's earnings per share declined by 35.1% 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, ARES CAPITAL CORP increased its bottom line by earning $1.93 versus $1.81 in the prior year. For the next year, the market is expecting a contraction of 20.7% in earnings ($1.53 versus $1.93).
  • The share price of ARES CAPITAL CORP has not done very well: it is down 9.98% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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AbbVie

Dividend Yield: 4.20%

AbbVie (NYSE: ABBV) shares currently have a dividend yield of 4.20%.

AbbVie Inc. discovers, develops, manufactures, and sells pharmaceutical products worldwide. The company has a P/E ratio of 29.97.

The average volume for AbbVie has been 9,274,400 shares per day over the past 30 days. AbbVie has a market cap of $89.6 billion and is part of the drugs industry. Shares are down 13.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates AbbVie as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, expanding profit margins and growth in earnings per share. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • ABBV's revenue growth has slightly outpaced the industry average of 13.4%. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Biotechnology industry. The net income increased by 144.9% when compared to the same quarter one year prior, rising from $506.00 million to $1,239.00 million.
  • Net operating cash flow has increased to $2,155.00 million or 20.66% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.70%.
  • The gross profit margin for ABBVIE INC is currently very high, coming in at 85.04%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, ABBV's net profit margin of 20.84% significantly trails the industry average.
  • ABBVIE 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, ABBVIE INC reported lower earnings of $1.09 versus $2.56 in the prior year. This year, the market expects an improvement in earnings ($4.28 versus $1.09).

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