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."

Healthcare Realty

Dividend Yield: 4.10%

Healthcare Realty (NYSE: HR) shares currently have a dividend yield of 4.10%.

Healthcare Realty Trust Incorporated is an independent real estate investment trust. The firm invests in real estate markets of the United States. The company has a P/E ratio of 50.44.

The average volume for Healthcare Realty has been 1,160,600 shares per day over the past 30 days. Healthcare Realty has a market cap of $3.0 billion and is part of the real estate industry. Shares are up 6.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Healthcare Realty as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, solid stock price performance, impressive record of earnings per share growth and notable return on equity. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The net income growth 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 increased by 3.2% when compared to the same quarter one year prior, going from $18.07 million to $18.66 million.
  • 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 3.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • HEALTHCARE REALTY TRUST INC 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, HEALTHCARE REALTY TRUST INC increased its bottom line by earning $0.59 versus $0.34 in the prior year. For the next year, the market is expecting a contraction of 13.6% in earnings ($0.51 versus $0.59).
  • 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, HEALTHCARE REALTY TRUST INC's return on equity is below that of both the industry average and the S&P 500.

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Guess

Dividend Yield: 4.10%

Guess (NYSE: GES) shares currently have a dividend yield of 4.10%.

Guess , Inc. designs, markets, distributes, and licenses lifestyle collections of contemporary apparel and accessories for men, women, and children that reflect the American lifestyle and European fashion sensibilities. The company has a P/E ratio of 20.50.

The average volume for Guess has been 1,117,300 shares per day over the past 30 days. Guess has a market cap of $1.8 billion and is part of the retail industry. Shares are down 3.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Guess as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, GES's share price has jumped by 26.60%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GES should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • GES's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, GES has a quick ratio of 2.04, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 36.62% is the gross profit margin for GUESS INC which we consider to be strong. Regardless of GES's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GES's net profit margin of 7.54% compares favorably to the industry average.
  • GES, with its decline in revenue, underperformed when compared the industry average of 9.8%. Since the same quarter one year prior, revenues slightly dropped by 5.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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Ventas

Dividend Yield: 4.80%

Ventas (NYSE: VTR) shares currently have a dividend yield of 4.80%.

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 50.07.

The average volume for Ventas has been 3,108,400 shares per day over the past 30 days. Ventas has a market cap of $20.4 billion and is part of the real estate industry. Shares are up 9.9% year-to-date as of the close of trading on Thursday.

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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 7.9%. 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 2.04%.
  • 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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