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: 4.50%

LTC Properties (NYSE: LTC) shares currently have a dividend yield of 4.50%.

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 23.70.

The average volume for LTC Properties has been 210,100 shares per day over the past 30 days. LTC Properties has a market cap of $1.8 billion and is part of the real estate industry. Shares are up 13.4% year-to-date as of the close of trading on Wednesday.

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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, solid stock price performance, increase in net income, expanding profit margins and good cash flow from operations. 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 11.9%. Since the same quarter one year prior, revenues rose by 23.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 13.1% when compared to the same quarter one year prior, going from $17.55 million to $19.86 million.
  • The gross profit margin for LTC PROPERTIES INC is currently very high, coming in at 77.98%. 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 51.08% significantly outperformed against the industry.
  • Net operating cash flow has slightly increased to $19.61 million or 9.74% when compared to the same quarter last year. Despite an increase in cash flow, LTC PROPERTIES INC's average is still marginally south of the industry average growth rate of 11.94%.

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Ventas

Dividend Yield: 4.30%

Ventas (NYSE: VTR) shares currently have a dividend yield of 4.30%.

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 50.47.

The average volume for Ventas has been 2,145,000 shares per day over the past 30 days. Ventas has a market cap of $22.9 billion and is part of the real estate industry. Shares are up 20.2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Ventas as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, revenue growth, growth in earnings per share and notable return on equity. 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 greatly exceeded that of the S&P 500, but is less than that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 23.7% when compared to the same quarter one year prior, going from $120.44 million to $148.98 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.9%. Since the same quarter one year prior, revenues slightly increased by 5.8%. Growth in the company's revenue appears to have helped boost 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, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • VENTAS INC has improved earnings per share by 37.5% 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, VENTAS INC reported lower earnings of $1.23 versus $1.27 in the prior year. This year, the market expects an improvement in earnings ($1.51 versus $1.23).
  • 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, VENTAS INC'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: 4.80%

PacWest Bancorp (NASDAQ: PACW) shares currently have a dividend yield of 4.80%.

PacWest Bancorp operates as the holding company for Pacific Western Bank that provides commercial banking products and services. The company accepts demand, money market, and time deposits. The company has a P/E ratio of 14.73.

The average volume for PacWest Bancorp has been 1,057,000 shares per day over the past 30 days. PacWest Bancorp has a market cap of $5.0 billion and is part of the banking industry. Shares are down 3.8% year-to-date as of the close of trading on Wednesday.

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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, compelling growth in net income, expanding profit margins, good cash flow from operations 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:
  • The revenue growth came in higher than the industry average of 1.3%. Since the same quarter one year prior, revenues rose by 24.9%. 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 PACWEST BANCORP is currently very high, coming in at 88.16%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 30.79% is above that of the industry average.
  • Net operating cash flow has slightly increased to $132.16 million or 4.48% when compared to the same quarter last year. In addition, PACWEST BANCORP has also vastly surpassed the industry average cash flow growth rate of -155.15%.
  • 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 23.8% when compared to the same quarter one year prior, going from $73.08 million to $90.46 million.
  • PACWEST BANCORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PACWEST BANCORP increased its bottom line by earning $2.82 versus $1.97 in the prior year. This year, the market expects an improvement in earnings ($2.90 versus $2.82).

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