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."

Meredith

Dividend Yield: 4.60%

Meredith (NYSE: MDP) shares currently have a dividend yield of 4.60%.

Meredith Corporation operates as a diversified media company that focuses primarily on the home and family marketplace in the United States. It operates in two segments, Local Media and National Media. The company has a P/E ratio of 17.45.

The average volume for Meredith has been 277,400 shares per day over the past 30 days. Meredith has a market cap of $1.9 billion and is part of the media industry. Shares are down 0.3% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Meredith as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, largely solid financial position with reasonable debt levels by most measures 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:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.9%. Since the same quarter one year prior, revenues slightly increased by 1.9%. 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 debt-to-equity ratio is somewhat low, currently at 0.83, 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 MDP's debt-to-equity ratio is low, the quick ratio, which is currently 0.63, displays a potential problem in covering short-term cash needs.
  • MEREDITH CORP's earnings per share declined by 17.2% 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, MEREDITH CORP increased its bottom line by earning $3.02 versus $2.50 in the prior year. This year, the market expects an improvement in earnings ($3.17 versus $3.02).
  • The gross profit margin for MEREDITH CORP is rather high; currently it is at 62.83%. Regardless of MDP'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 8.00% trails the industry average.

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RR Donnelley & Sons

Dividend Yield: 7.70%

RR Donnelley & Sons (NASDAQ: RRD) shares currently have a dividend yield of 7.70%.

R.R. Donnelley & Sons Company provides integrated communications solutions to private and public sector clients in the United States and internationally. The company operates through Publishing and Retail Services, Variable Print, Strategic Services, and International segments. The company has a P/E ratio of 8.94.

The average volume for RR Donnelley & Sons has been 1,511,700 shares per day over the past 30 days. RR Donnelley & Sons has a market cap of $2.8 billion and is part of the diversified services industry. Shares are up 0.9% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates RR Donnelley & Sons as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • DONNELLEY (R R) & SONS CO reported significant earnings per share improvement 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 year. We feel that this trend should continue. During the past fiscal year, DONNELLEY (R R) & SONS CO increased its bottom line by earning $0.73 versus $0.58 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $0.73).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Services & Supplies industry. The net income increased by 264.1% when compared to the same quarter one year prior, rising from $19.50 million to $71.00 million.
  • 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 Commercial Services & Supplies industry and the overall market, DONNELLEY (R R) & SONS CO's return on equity exceeds that of both the industry average and the S&P 500.
  • RRD, with its decline in revenue, slightly underperformed the industry average of 0.7%. Since the same quarter one year prior, revenues slightly dropped by 4.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for DONNELLEY (R R) & SONS CO is rather low; currently it is at 22.13%. Regardless of RRD's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.41% trails the industry average.

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Pitney Bowes

Dividend Yield: 4.20%

Pitney Bowes (NYSE: PBI) shares currently have a dividend yield of 4.20%.

Pitney Bowes Inc. provides technology products and solutions in the United States and internationally. The company operates in three segments: Small & Medium Business Solutions; Enterprise Business Solutions; and Digital Commerce Solutions. The company has a P/E ratio of 8.92.

The average volume for Pitney Bowes has been 1,933,400 shares per day over the past 30 days. Pitney Bowes has a market cap of $3.4 billion and is part of the consumer durables industry. Shares are down 12.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Pitney Bowes as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, expanding profit margins, impressive record of earnings per share growth and notable return on equity. 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:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Services & Supplies industry. The net income increased by 38.0% when compared to the same quarter one year prior, rising from $62.53 million to $86.28 million.
  • The gross profit margin for PITNEY BOWES INC is rather high; currently it is at 63.37%. Regardless of PBI'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 9.20% trails the industry average.
  • PITNEY BOWES INC has improved earnings per share by 41.4% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, PITNEY BOWES INC increased its bottom line by earning $2.00 versus $1.48 in the prior year. For the next year, the market is expecting a contraction of 7.3% in earnings ($1.86 versus $2.00).
  • PBI, with its decline in revenue, slightly underperformed the industry average of 0.7%. Since the same quarter one year prior, revenues slightly dropped by 4.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Commercial Services & Supplies industry and the overall market, PITNEY BOWES INC's return on equity significantly exceeds that of both the industry average and the S&P 500.

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