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."

Western Refining

Dividend Yield: 5.00%

Western Refining (NYSE: WNR) shares currently have a dividend yield of 5.00%.

Western Refining, Inc. operates as an independent crude oil refiner and marketer of refined products. The company operates in four segments: Refining, NTI, WNRL, and Retail. The company has a P/E ratio of 5.57.

The average volume for Western Refining has been 1,959,200 shares per day over the past 30 days. Western Refining has a market cap of $2.8 billion and is part of the energy industry. Shares are down 13.9% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Western Refining as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, attractive valuation levels 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:
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, WESTERN REFINING INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 73.23% to $373.62 million when compared to the same quarter last year. In addition, WESTERN REFINING INC has also vastly surpassed the industry average cash flow growth rate of -26.87%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 36.8%. Since the same quarter one year prior, revenues fell by 36.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 17.9% when compared to the same quarter one year ago, dropping from $186.75 million to $153.30 million.

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Welltower

Dividend Yield: 5.40%

Welltower (NYSE: HCN) shares currently have a dividend yield of 5.40%.

Welltower Inc. is an independent equity real estate investment trust. The firm engages in acquiring, planning, developing, managing, repositioning and monetizing of real estate assets. It primarily invests in the real estate markets of the United States. The company has a P/E ratio of 24.77.

The average volume for Welltower has been 2,769,200 shares per day over the past 30 days. Welltower has a market cap of $22.5 billion and is part of the real estate industry. Shares are down 6.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Welltower as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, reasonable valuation levels 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:
  • HCN's revenue growth has slightly outpaced the industry average of 6.3%. Since the same quarter one year prior, revenues rose by 15.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • WELLTOWER INC has improved earnings per share by 18.2% 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, WELLTOWER INC increased its bottom line by earning $1.40 versus $0.09 in the prior year. This year, the market expects an improvement in earnings ($2.48 versus $1.40).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 30.0% when compared to the same quarter one year prior, rising from $152.61 million to $198.40 million.
  • Net operating cash flow has significantly increased by 61.22% to $416.98 million when compared to the same quarter last year. In addition, WELLTOWER INC has also vastly surpassed the industry average cash flow growth rate of 7.99%.

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Federated Investors

Dividend Yield: 4.20%

Federated Investors (NYSE: FII) shares currently have a dividend yield of 4.20%.

Federated Investors, Inc. is a publicly owned asset management holding company. The company has a P/E ratio of 14.61.

The average volume for Federated Investors has been 969,100 shares per day over the past 30 days. Federated Investors has a market cap of $2.5 billion and is part of the financial services industry. Shares are down 17.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Federated Investors as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, growth in earnings per share and increase in net income. 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 0.3%. Since the same quarter one year prior, revenues rose by 11.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the 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 Capital Markets industry and the overall market, FEDERATED INVESTORS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • FEDERATED INVESTORS INC has improved earnings per share by 21.1% 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, FEDERATED INVESTORS INC increased its bottom line by earning $1.63 versus $1.43 in the prior year. This year, the market expects an improvement in earnings ($1.98 versus $1.63).
  • 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 20.2% when compared to the same quarter one year prior, going from $39.61 million to $47.61 million.
  • The gross profit margin for FEDERATED INVESTORS INC is currently lower than what is desirable, coming in at 31.56%. Regardless of FII's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, FII's net profit margin of 19.54% compares favorably to the industry average.

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