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."

LTC Properties

Dividend Yield: 4.80%

LTC Properties (NYSE: LTC) shares currently have a dividend yield of 4.80%.

LTC Properties, Inc. operates as a health care real estate investment trust (REIT) in the United States. The company has a P/E ratio of 23.09.

The average volume for LTC Properties has been 258,400 shares per day over the past 30 days. LTC Properties has a market cap of $1.7 billion and is part of the real estate industry. Shares are up 3.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates LTC Properties as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, expanding profit margins, solid stock price performance 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 7.9%. Since the same quarter one year prior, revenues rose by 22.5%. 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 $31.81 million or 20.13% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 2.04%.
  • The gross profit margin for LTC PROPERTIES INC is currently very high, coming in at 71.97%. Regardless of LTC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LTC's net profit margin of 47.66% significantly outperformed against the industry.
  • Compared to where it was trading a year ago, LTC's share price has not changed very much due to (a) the relatively weak year-over-year performance of the overall market, (b) the company's stagnant earnings, and (c) other mixed results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • LTC PROPERTIES INC's earnings per share declined by 15.8% 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, LTC PROPERTIES INC reported lower earnings of $1.95 versus $1.99 in the prior year. This year, the market expects an improvement in earnings ($2.17 versus $1.95).

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People's United Financial

Dividend Yield: 4.20%

People's United Financial (NASDAQ: PBCT) shares currently have a dividend yield of 4.20%.

People's United Financial, Inc. operates as the bank holding company for People's United Bank, National Association that provides commercial banking, retail banking, and wealth management services to individual, corporate, and municipal customers. The company has a P/E ratio of 18.28.

The average volume for People's United Financial has been 4,349,000 shares per day over the past 30 days. People's United Financial has a market cap of $4.9 billion and is part of the banking industry. Shares are down 1.7% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates People's United Financial as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations, increase in net income and growth in earnings per share. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.5%. Since the same quarter one year prior, revenues slightly increased by 10.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for PEOPLE'S UNITED FINL INC is currently very high, coming in at 87.41%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 19.75% is above that of the industry average.
  • Net operating cash flow has increased to $129.10 million or 14.75% when compared to the same quarter last year. In addition, PEOPLE'S UNITED FINL INC has also vastly surpassed the industry average cash flow growth rate of -53.36%.
  • 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 Commercial Banks industry average. The net income increased by 9.4% when compared to the same quarter one year prior, going from $64.70 million to $70.80 million.
  • PEOPLE'S UNITED FINL INC's earnings per share improvement from the most recent quarter was slightly positive. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, PEOPLE'S UNITED FINL INC increased its bottom line by earning $0.86 versus $0.85 in the prior year. This year, the market expects an improvement in earnings ($0.92 versus $0.86).

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GEO Group

Dividend Yield: 8.50%

GEO Group (NYSE: GEO) shares currently have a dividend yield of 8.50%.

The GEO Group, Inc. provides government-outsourced services specializing in the management of correctional, detention, and re-entry facilities, and the provision of community based services and youth services in the United States, Australia, South Africa, the United Kingdom, and Canada. The company has a P/E ratio of 16.34.

The average volume for GEO Group has been 534,900 shares per day over the past 30 days. GEO Group has a market cap of $2.3 billion and is part of the real estate industry. Shares are up 3.9% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates GEO Group as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, attractive valuation levels, increase in net income and growth in earnings per share. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • GEO's revenue growth has slightly outpaced the industry average of 7.9%. Since the same quarter one year prior, revenues rose by 16.9%. 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 Real Estate Investment Trusts (REITs) industry and the overall market, GEO GROUP INC's return on equity exceeds that of both the industry average and the S&P 500.
  • 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 15.8% when compared to the same quarter one year prior, going from $38.05 million to $44.06 million.
  • GEO GROUP INC has improved earnings per share by 13.5% 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, GEO GROUP INC reported lower earnings of $1.88 versus $1.99 in the prior year. This year, the market expects an improvement in earnings ($2.02 versus $1.88).

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