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."

Welltower

Dividend Yield: 5.20%

Welltower (NYSE: HCN) shares currently have a dividend yield of 5.20%.

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 28.20.

The average volume for Welltower has been 2,963,600 shares per day over the past 30 days. Welltower has a market cap of $23.4 billion and is part of the real estate industry. Shares are down 2.7% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Welltower as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels, good cash flow from operations, expanding profit margins 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 8.0%. Since the same quarter one year prior, revenues rose by 19.3%. 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.
  • Net operating cash flow has increased to $337.14 million or 18.50% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.99%.
  • 35.53% is the gross profit margin for WELLTOWER INC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, HCN's net profit margin of 14.54% significantly trails the industry average.
  • 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, WELLTOWER INC's return on equity is below that of both the industry average and the S&P 500.

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Ventas

Dividend Yield: 5.10%

Ventas (NYSE: VTR) shares currently have a dividend yield of 5.10%.

Ventas, Inc. is a publicly owned real estate investment trust. The firm engages in investment, management, financing, and leasing of properties in the healthcare industry. It invests in the real estate markets of the United States and Canada. The company has a P/E ratio of 46.48.

The average volume for Ventas has been 2,837,800 shares per day over the past 30 days. Ventas has a market cap of $19.1 billion and is part of the real estate industry. Shares are up 0.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Ventas as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, increase in net income 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:
  • VTR's revenue growth has slightly outpaced the industry average of 8.0%. Since the same quarter one year prior, revenues rose by 15.0%. 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 Real Estate Investment Trusts (REITs) industry average. The net income increased by 16.4% when compared to the same quarter one year prior, going from $107.19 million to $124.73 million.
  • Net operating cash flow has increased to $369.72 million or 10.40% when compared to the same quarter last year. In addition, VENTAS INC has also modestly surpassed the industry average cash flow growth rate of 0.99%.
  • VENTAS INC has improved earnings per share by 31.0% 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, VENTAS INC reported lower earnings of $1.23 versus $1.27 in the prior year. This year, the market expects an improvement in earnings ($1.41 versus $1.23).
  • The gross profit margin for VENTAS INC is currently lower than what is desirable, coming in at 29.08%. Regardless of VTR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, VTR's net profit margin of 14.82% is significantly lower than the industry average.

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EastGroup Properties

Dividend Yield: 4.20%

EastGroup Properties (NYSE: EGP) shares currently have a dividend yield of 4.20%.

EastGroup Properties, Inc., a real estate investment trust (REIT), focuses on the development, acquisition, and operation of industrial properties in the United States. The company has a P/E ratio of 38.11.

The average volume for EastGroup Properties has been 177,700 shares per day over the past 30 days. EastGroup Properties has a market cap of $1.8 billion and is part of the real estate industry. Shares are up 3.7% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates EastGroup Properties as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, expanding profit margins 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:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.0%. Since the same quarter one year prior, revenues slightly increased by 6.6%. 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.
  • Net operating cash flow has increased to $27.81 million or 23.67% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.99%.
  • 39.48% is the gross profit margin for EASTGROUP PROPERTIES which we consider to be strong. Regardless of EGP'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 18.66% trails the industry average.
  • EASTGROUP PROPERTIES's earnings per share declined by 12.5% 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, EASTGROUP PROPERTIES reported lower earnings of $1.48 versus $1.52 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $1.48).

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