DALLAS (

TheStreet

) -- You usually can't invest in one part of a company and not another. Investors are forced to accept less-appealing divisions along with the star performers.

But that's not the case with

Holly Corp.

( HOC). The Dallas-based oil company's consolidated subsidiary,

Holly Energy Partners

(HEP) - Get Report

, is publicly traded, and pays a fat dividend and is extremely profitable.

Holly Energy Partners operates crude-oil pipelines, storage tanks and distribution terminals in West Texas, Utah, Arizona and New Mexico. While the company doesn't have a diversified client base, Holly Corp.,

Alon

(ALJ)

and

BP

(BP) - Get Report

account for 66%, 24% and 3% of sales, respectively, giving Holly Energy Partners a wide operating margin of over 40%, more than twice the industry average.

Holly Energy Partners beat analysts' earnings estimates in the third quarter, justifying a jump in the stock price over the past year. Holly Energy Partners has easily exceeded the S&P 500 Index, with share-price appreciation of 33% and a return of 50% when dividend reinvestments are included. Holly Energy Partners looks to be a hotshot in the economic recovery. Closer inspection of the balance sheet, however, may lead to some big questions.

Almost all of the company's financing comes from long-term debt. With only a thin strip of equity, Holly Energy Partners appears very vulnerable. Compounding those fears is the dividend payout ratio of more than 100%, meaning the company is paying more in dividends than earnings per share can cover. Under normal circumstances, that would quickly destroy a company's finances, as it would have to pay for dividends with debt financing.

Since it's a consolidated subsidiary, however, the financing structure of Holly Energy Partners is a little misleading. It would make more sense to look at Holly Corp.'s balance sheet. Alas, Holly Corp. is quite healthy, with a current ratio well over 1 and a debt-to-equity ratio of 0.56.

Investing in Holly Energy Partners provides an opportunity to cash in on a very profitable segment of a company without having to load up with lower-margin units. The dividend yield of 8.3% is far higher than that of most other companies and bests oil-and-gas bets like

Exxon Mobil

(XOM) - Get Report

and

Chevron

(CVX) - Get Report

.

-- Reported by David MacDougall in Boston.

Prior to joining TheStreet.com Ratings, David MacDougall was an analyst at Cambridge Associates, an investment consulting firm, where he worked with private equity and venture capital funds. He graduated cum laude from Northeastern University with a bachelor's degree in finance and is a Level III CFA candidate.