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."

Valley National Bancorp

Dividend Yield: 4.60%

Valley National Bancorp (NYSE: VLY) shares currently have a dividend yield of 4.60%.

Valley National Bancorp operates as the holding company for the Valley National Bank that provides commercial, retail, trust, and investment services. The company operates through Commercial Lending, Consumer Lending, and Investment Management segments. The company has a P/E ratio of 22.19.

The average volume for Valley National Bancorp has been 1,921,700 shares per day over the past 30 days. Valley National Bancorp has a market cap of $2.4 billion and is part of the banking industry. Shares are down 3.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Valley National Bancorp as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, expanding profit margins and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 1.1%. Since the same quarter one year prior, revenues slightly increased by 9.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 19.3% when compared to the same quarter one year prior, going from $30.34 million to $36.19 million.
  • Net operating cash flow has slightly increased to $54.73 million or 1.60% when compared to the same quarter last year. In addition, VALLEY NATIONAL BANCORP has also vastly surpassed the industry average cash flow growth rate of -122.12%.
  • The gross profit margin for VALLEY NATIONAL BANCORP is currently very high, coming in at 81.53%. 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 17.47% trails the industry average.
  • VALLEY NATIONAL BANCORP has improved earnings per share by 7.7% 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, VALLEY NATIONAL BANCORP reported lower earnings of $0.43 versus $0.57 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus $0.43).

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General Motors

Dividend Yield: 4.80%

General Motors (NYSE: GM) shares currently have a dividend yield of 4.80%.

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 5.24.

The average volume for General Motors has been 11,362,700 shares per day over the past 30 days. General Motors has a market cap of $48.3 billion and is part of the automotive industry. Shares are down 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 shows weak operating cash flow.

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 106.7% when compared to the same quarter one year prior, rising from $945.00 million to $1,953.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.6%. Since the same quarter one year prior, revenues slightly increased by 4.3%. 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 4.8% in earnings ($5.70 versus $5.99).

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R.R.Donnelley & Sons

Dividend Yield: 6.40%

R.R.Donnelley & Sons (NASDAQ: RRD) shares currently have a dividend yield of 6.40%.

R.R. Donnelley & Sons Company enables organizations to communicate by creating, managing, producing, distributing, and processing content on behalf of its customers. The company operates through Publishing and Retail Services, Variable Print, Strategic Services, and International segments. The company has a P/E ratio of 20.20.

The average volume for R.R.Donnelley & Sons has been 1,685,900 shares per day over the past 30 days. R.R.Donnelley & Sons has a market cap of $3.4 billion and is part of the diversified services industry. Shares are up 10.7% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates R.R.Donnelley & Sons as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, notable return on equity and increase in net income. 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:
  • 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 ($1.56 versus $0.73).
  • RRD, with its decline in revenue, underperformed when compared the industry average of 6.9%. Since the same quarter one year prior, revenues slightly dropped by 3.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Commercial Services & Supplies industry average, but is greater than that of the S&P 500. The net income increased by 78.5% when compared to the same quarter one year prior, rising from $22.30 million to $39.80 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When 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 the industry average and significantly exceeds that of the S&P 500.
  • The gross profit margin for DONNELLEY (R R) & SONS CO is rather low; currently it is at 21.47%. 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 1.50% trails the industry average.

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