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: 5.30%

Valley National Bancorp (NYSE: VLY) shares currently have a dividend yield of 5.30%.

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 15.98.

The average volume for Valley National Bancorp has been 2,711,000 shares per day over the past 30 days. Valley National Bancorp has a market cap of $1.9 billion and is part of the banking industry. Shares are down 14.2% year-to-date as of the close of trading on Tuesday.

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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 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 came in higher than the industry average of 2.6%. 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. Regardless of the strong results of the gross profit margin, the net profit margin of 18.38% trails the industry average.
  • 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).
  • Net operating cash flow has decreased to $46.37 million or 27.54% when compared to the same quarter last year. Despite a decrease in cash flow of 27.54%, VALLEY NATIONAL BANCORP is still significantly exceeding the industry average of -96.18%.

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United Bankshares

Dividend Yield: 4.10%

United Bankshares (NASDAQ: UBSI) shares currently have a dividend yield of 4.10%.

United Bankshares, Inc. operates as the bank holding company for United Bank (WV) and United Bank (VA) that provides commercial and retail banking services and products in the United States. The company has a P/E ratio of 16.41.

The average volume for United Bankshares has been 461,800 shares per day over the past 30 days. United Bankshares has a market cap of $2.3 billion and is part of the banking industry. Shares are down 8.9% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates United Bankshares 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, growth in earnings per share and increase in net income. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 2.6%. Since the same quarter one year prior, revenues slightly increased by 0.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for UNITED BANKSHARES INC/WV is currently very high, coming in at 87.78%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 28.23% is above that of the industry average.
  • Net operating cash flow has increased to $55.32 million or 31.78% when compared to the same quarter last year. In addition, UNITED BANKSHARES INC/WV has also vastly surpassed the industry average cash flow growth rate of -96.18%.
  • UNITED BANKSHARES INC/WV's earnings per share improvement from the most recent quarter was slightly positive. 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, UNITED BANKSHARES INC/WV increased its bottom line by earning $1.92 versus $1.70 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus $1.92).
  • 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 Commercial Banks industry average. The net income increased by 5.4% when compared to the same quarter one year prior, going from $33.26 million to $35.05 million.

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ALLETE

Dividend Yield: 4.20%

ALLETE (NYSE: ALE) shares currently have a dividend yield of 4.20%.

ALLETE, Inc. operates as an energy company. The company operates through Regulated Operations, and Investments and Other segments. It generates electricity from coal-fired, hydro, wind, and biomass co-fired facilities. The company has a P/E ratio of 15.07.

The average volume for ALLETE has been 273,300 shares per day over the past 30 days. ALLETE has a market cap of $2.4 billion and is part of the utilities industry. Shares are down 0.6% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates ALLETE as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • ALE's very impressive revenue growth greatly exceeded the industry average of 0.5%. Since the same quarter one year prior, revenues leaped by 60.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ALLETE INC has improved earnings per share by 26.8% 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, ALLETE INC increased its bottom line by earning $2.90 versus $2.63 in the prior year. This year, the market expects an improvement in earnings ($3.41 versus $2.90).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 45.2% when compared to the same quarter one year prior, rising from $41.60 million to $60.40 million.
  • The debt-to-equity ratio is somewhat low, currently at 0.88, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that ALE's debt-to-equity ratio is low, the quick ratio, which is currently 0.70, displays a potential problem in covering short-term cash needs.

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