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."

Tallgrass Energy Partners

Dividend Yield: 6.10%

Tallgrass Energy Partners

(NYSE:

TEP

) shares currently have a dividend yield of 6.10%.

Tallgrass Energy Partners, LP acquires, owns, develops, and operates various midstream energy assets in North America. The company operates through three segments: Crude Oil Transportation & Logistics, Natural Gas Transportation & Logistics, and Processing & Logistics. The company has a P/E ratio of 25.62.

The average volume for Tallgrass Energy Partners has been 353,200 shares per day over the past 30 days. Tallgrass Energy Partners has a market cap of $3.3 billion and is part of the energy industry. Shares are up 9.6% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Tallgrass Energy Partners

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and compelling growth 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:

  • The revenue growth greatly exceeded the industry average of 24.6%. Since the same quarter one year prior, revenues rose by 26.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TALLGRASS ENERGY PRT LP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • The gross profit margin for TALLGRASS ENERGY PRT LP is rather high; currently it is at 56.86%. It has increased significantly from the same period last year. Along with this, the net profit margin of 30.30% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 82.48% to $88.76 million when compared to the same quarter last year. In addition, TALLGRASS ENERGY PRT LP has also vastly surpassed the industry average cash flow growth rate of -49.17%.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 36.4% when compared to the same quarter one year prior, rising from $32.32 million to $44.07 million.

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ONEOK Partners

Dividend Yield: 8.00%

ONEOK Partners

(NYSE:

OKS

) shares currently have a dividend yield of 8.00%.

ONEOK Partners, L.P. engages in the gathering, processing, storage, and transportation of natural gas in the United States. It operates through three segments: Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines. The company has a P/E ratio of 36.52.

The average volume for ONEOK Partners has been 1,054,800 shares per day over the past 30 days. ONEOK Partners has a market cap of $11.3 billion and is part of the energy industry. Shares are up 30.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

ONEOK Partners

as a

buy

. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels, good cash flow from operations, growth in earnings per share and expanding profit margins. 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:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 74.1% when compared to the same quarter one year prior, rising from $145.59 million to $253.52 million.
  • Net operating cash flow has significantly increased by 308.88% to $266.25 million when compared to the same quarter last year. In addition, ONEOK PARTNERS -LP has also vastly surpassed the industry average cash flow growth rate of -49.17%.
  • ONEOK PARTNERS -LP reported significant earnings per share improvement 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, ONEOK PARTNERS -LP reported lower earnings of $0.77 versus $2.34 in the prior year. This year, the market expects an improvement in earnings ($2.25 versus $0.77).
  • Despite the weak revenue results, OKS has outperformed against the industry average of 24.6%. Since the same quarter one year prior, revenues slightly dropped by 1.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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Pembina Pipeline

Dividend Yield: 5.00%

Pembina Pipeline

(NYSE:

PBA

) shares currently have a dividend yield of 5.00%.

Pembina Pipeline Corporation provides transportation and midstream services for the energy industry in North America. It operates through four segments: Conventional Pipelines, Oil Sands & Heavy Oil, Gas Services, and Midstream. The company has a P/E ratio of 159.83.

The average volume for Pembina Pipeline has been 303,700 shares per day over the past 30 days. Pembina Pipeline has a market cap of $11.4 billion and is part of the energy industry. Shares are up 36% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Pembina Pipeline

as a

buy

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:

  • The current debt-to-equity ratio, 0.42, is low and is below the industry average, implying that there has been successful management of debt levels.
  • Net operating cash flow has significantly increased by 125.83% to $271.00 million when compared to the same quarter last year. In addition, PEMBINA PIPELINE CORP has also vastly surpassed the industry average cash flow growth rate of -49.17%.
  • Despite the weak revenue results, PBA has outperformed against the industry average of 24.6%. Since the same quarter one year prior, revenues fell by 11.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 15.0% when compared to the same quarter one year ago, dropping from $120.00 million to $102.00 million.
  • The gross profit margin for PEMBINA PIPELINE CORP is currently lower than what is desirable, coming in at 29.50%. Regardless of PBA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, PBA's net profit margin of 10.02% compares favorably to the industry average.

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