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."

General Motors

Dividend Yield: 5.20%

General Motors (NYSE: GM) shares currently have a dividend yield of 5.20%.

General Motors Company designs, builds, and sells cars, crossovers, trucks, and automobile parts worldwide. The company operates through GM North America, GM Europe, GM International Operations, GM South America, and GM Financial segments. The company has a P/E ratio of 4.98.

The average volume for General Motors has been 15,756,700 shares per day over the past 30 days. General Motors has a market cap of $45.5 billion and is part of the automotive industry. Shares are down 11.8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates General Motors as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, notable return on equity, attractive valuation levels and impressive record of earnings per share growth. 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 Automobiles industry. The net income increased by 215.3% when compared to the same quarter one year prior, rising from $1,987.00 million to $6,266.00 million.
  • GM's revenue growth trails the industry average of 17.5%. Since the same quarter one year prior, revenues slightly increased by 0.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Automobiles industry and the overall market, GENERAL MOTORS CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • GENERAL MOTORS 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, GENERAL MOTORS CO increased its bottom line by earning $5.99 versus $1.64 in the prior year. For the next year, the market is expecting a contraction of 8.3% in earnings ($5.50 versus $5.99).

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Duke Energy Corporation

Dividend Yield: 4.40%

Duke Energy Corporation (NYSE: DUK) shares currently have a dividend yield of 4.40%.

Duke Energy Corporation, together with its subsidiaries, operates as an energy company in the United States and Latin America. It operates through three segments: Regulated Utilities, International Energy, and Commercial Power. The company has a P/E ratio of 18.48.

The average volume for Duke Energy Corporation has been 3,678,800 shares per day over the past 30 days. Duke Energy Corporation has a market cap of $51.1 billion and is part of the utilities industry. Shares are up 2.8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Duke Energy Corporation 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, expanding profit margins 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:
  • DUKE ENERGY CORP 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, DUKE ENERGY CORP increased its bottom line by earning $4.03 versus $3.46 in the prior year. This year, the market expects an improvement in earnings ($4.62 versus $4.03).
  • 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 391.8% when compared to the same quarter one year prior, rising from $97.00 million to $477.00 million.
  • 37.09% is the gross profit margin for DUKE ENERGY CORP which we consider to be strong. 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 8.96% trails the industry average.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 8.5%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. The declining revenue has not hurt the company's bottom line, with increasing 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 Electric Utilities industry and the overall market, DUKE ENERGY CORP's return on equity is below that of both the industry average and the S&P 500.

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PacWest Bancorp

Dividend Yield: 6.20%

PacWest Bancorp (NASDAQ: PACW) shares currently have a dividend yield of 6.20%.

PacWest Bancorp operates as the holding company for Pacific Western Bank that provides commercial banking products and services to individuals, professionals, and small to mid-sized businesses in the United States. It accepts demand, money market, and time deposits. The company has a P/E ratio of 11.53.

The average volume for PacWest Bancorp has been 1,221,000 shares per day over the past 30 days. PacWest Bancorp has a market cap of $3.9 billion and is part of the banking industry. Shares are down 22.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates PacWest Bancorp as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, increase in net income and notable return on equity. 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 5.2%. Since the same quarter one year prior, revenues rose by 22.1%. 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 PACWEST BANCORP is currently very high, coming in at 89.66%. Regardless of PACW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PACW's net profit margin of 26.45% significantly outperformed against the industry.
  • PACWEST BANCORP's earnings per share declined by 14.5% 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, PACWEST BANCORP increased its bottom line by earning $2.81 versus $1.97 in the prior year. This year, the market expects an improvement in earnings ($2.95 versus $2.81).
  • 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 1.2% when compared to the same quarter one year prior, going from $71.00 million to $71.84 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. When compared to other companies in the Commercial Banks industry and the overall market, PACWEST BANCORP's return on equity is below that of both the industry average and the S&P 500.

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