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."

Prologis

Dividend Yield: 4.40%

Prologis (NYSE: PLD) shares currently have a dividend yield of 4.40%.

Prologis Inc. is an independent equity real estate investment trust. It invests in the real estate markets across the globe. The firm engages in the ownership, development, management, and leasing of industrial distribution and retail properties. The company has a P/E ratio of 21.99.

The average volume for Prologis has been 3,332,400 shares per day over the past 30 days. Prologis has a market cap of $18.9 billion and is part of the real estate industry. Shares are down 16% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Prologis as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.2%. Since the same quarter one year prior, revenues rose by 36.0%. 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 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, PROLOGIS INC's return on equity is below that of both the industry average and the S&P 500.
  • PROLOGIS INC 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. 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, PROLOGIS INC increased its bottom line by earning $1.64 versus $1.18 in the prior year. For the next year, the market is expecting a contraction of 66.8% in earnings ($0.55 versus $1.64).
  • The share price of PROLOGIS INC has not done very well: it is down 19.91% 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.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 70.8% when compared to the same quarter one year ago, falling from $410.29 million to $120.00 million.

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Highwoods Properties

Dividend Yield: 4.10%

Highwoods Properties (NYSE: HIW) shares currently have a dividend yield of 4.10%.

Highwoods Properties, Inc. is a real estate investment trust. The trust engages in leasing, management, development, construction, and other customer-related services for its properties and for third parties. It invests in the real estate markets of United States. The company has a P/E ratio of 49.21.

The average volume for Highwoods Properties has been 829,800 shares per day over the past 30 days. Highwoods Properties has a market cap of $4.0 billion and is part of the real estate industry. Shares are down 5.2% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Highwoods Properties as a buy. Among the primary strengths of the company is its revenue growth. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.2%. Since the same quarter one year prior, revenues slightly increased by 2.6%. 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.
  • HIGHWOODS PROPERTIES INC's earnings per share declined by 25.0% in the most recent quarter compared to 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, HIGHWOODS PROPERTIES INC reported lower earnings of $0.84 versus $1.19 in the prior year. This year, the market expects an improvement in earnings ($1.12 versus $0.84).
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry average. The net income has decreased by 6.9% when compared to the same quarter one year ago, dropping from $22.54 million to $20.98 million.
  • Net operating cash flow has declined marginally to $79.47 million or 4.52% when compared to the same quarter last year. Despite a decrease in cash flow HIGHWOODS PROPERTIES INC is still fairing well by exceeding its industry average cash flow growth rate of -51.84%.
  • HIW is off 11.37% from its price level of one year ago, reflecting a combination of (a) the general market trend and (b) the company's own weaknesses, including its lower earnings per share compared to the year-earlier quarter. 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.

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Principal Financial Group

Dividend Yield: 4.30%

Principal Financial Group (NYSE: PFG) shares currently have a dividend yield of 4.30%.

Principal Financial Group, Inc. provides retirement, asset management, and insurance products and services. It operates through Retirement and Investor Services, Principal Global Investors, Principal International, and U.S. Insurance Solutions segments. The company has a P/E ratio of 8.71.

The average volume for Principal Financial Group has been 1,989,100 shares per day over the past 30 days. Principal Financial Group has a market cap of $10.3 billion and is part of the insurance industry. Shares are down 21.3% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Principal Financial Group as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, attractive valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. 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 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 Insurance industry and the overall market, PRINCIPAL FINANCIAL GRP INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $1,054.10 million or 16.43% when compared to the same quarter last year. In addition, PRINCIPAL FINANCIAL GRP INC has also vastly surpassed the industry average cash flow growth rate of -83.92%.
  • PRINCIPAL FINANCIAL GRP INC's earnings per share declined by 5.5% 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, PRINCIPAL FINANCIAL GRP INC increased its bottom line by earning $4.07 versus $3.66 in the prior year. This year, the market expects an improvement in earnings ($4.25 versus $4.07).
  • Despite the weak revenue results, PFG has outperformed against the industry average of 15.3%. Since the same quarter one year prior, revenues slightly dropped by 3.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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