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For many investors, dividends are considered a balanced and reliable approach for building wealth. But when dividend yields reach over 10%, many wonder if the payouts are too good to be true. Today we focused on mid-tier companies offering some of the highest yields in their class, but we only filtered for those that can sustain their dividends with strong sources of profitability. As a way to better narrow in on the companies that are standing on firm financial footing, we further narrowed our search to include only the companies that analysts have confidence in, those that analyst on average have rated positively in recent months. Under this criteria, we came up with a short, but note-worthy list of companies that warrant further research and analysis.

The Operating Profit Margin is a profitability ratio that measures the effectiveness of the company's operating efficiency. This metric allows investors to see how much profit is left after all variable costs are covered. If the company's margin is increasing over time this means that it's earning more per dollar of sales. Finding trends in the Operating Profit Margin helps investors identify companies that are improving profitability over time and managing the economic landscape better than competitors.

The Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well due to the trend of increasing profitability. Net Margin = Net Income/Total Revenue

We first looked for mid cap stocks with a very high yield (more than 10%). Next, we then screened for businesses with strong profit margins (1-year operating margin>15%)(Net Margin [TTM]>10%). We then screened for businesses that analysts rate as "Buy" (2 < mean recommendation < 3). We did not screen out any sectors.

Do you think these mid-cap stocks can offer attractive returns? Use this list as a starting-off point for your own analysis.

1) Hatteras Financial Corp (NYSE:HTS)

Industry:REIT - Residential
Market Cap:$2.82B

Hatteras Financial Corp has a Dividend Yield of 12.52%, a Payout Ratio of 98.63%, a Operating Profit Margin of 65.88%, a Net Margin of 65.88%, and a Analysts' Rating of 2.20. The short interest was 2.36% as of 08/14/2012. Hatteras Financial Corp. operates as an externally-managed mortgage real estate investment trust (REIT). It invests in fixed-rate and adjustable-rate single-family residential mortgage pass-through securities guaranteed or issued by the United States Government agency or by the United States Government-sponsored entity, and the Federal Home Loan Mortgage Corporation.

2) Invesco Mortgage Capital Inc. (NYSE:IVR)

Industry:Mortgage Investment
Market Cap:$2.29B

Invesco Mortgage Capital Inc. has a Dividend Yield of 13.88%, a Payout Ratio of 99.61%, a Operating Profit Margin of 57.94%, a Net Margin of 57.94%, and a Analysts' Rating of 2.30. The short interest was 5.50% as of 08/14/2012. Invesco Agency Securities Inc. operates as a mortgage real estate investment trust. The company was founded in 2008 and is based in Atlanta, Georgia.

3) CYS Investments Inc. (NYSE:CYS)

Industry:REIT - Residential
Market Cap:$2.38B

CYS Investestments Inc. has a Dividend Yield of 14.03%, a Payout Ratio of 66.25%, a Operating Profit Margin of 80.49%, a Net Margin of 118.20%, and a Analysts' Rating of 1.90. The short interest was 8.33% as of 08/14/2012. CYS is a specialty finance company that focuses on achieving consistent risk-adjusted investment income. CYS invests on a leveraged basis in residential mortgage pass-through securities for which the principal and interest payments are guaranteed by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association, and collateralized by single-family residential mortgage loans.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.