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."

Genesis Energy

Dividend Yield: 7.00%

Genesis Energy

(NYSE:

GEL

) shares currently have a dividend yield of 7.00%.

Genesis Energy, L.P. operates in the midstream segment of the oil and gas industry. The company operates through five segments: Offshore Pipeline Transportation, Onshore Pipeline Transportation, Refinery Services, Marine Transportation, and Supply and Logistics. The company has a P/E ratio of 9.15.

The average volume for Genesis Energy has been 565,100 shares per day over the past 30 days. Genesis Energy has a market cap of $4.2 billion and is part of the energy industry. Shares are up 1.2% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Genesis Energy

as a

buy

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, notable return on equity, reasonable valuation levels and impressive record of earnings per share growth. 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 74.6% when compared to the same quarter one year prior, rising from $20.22 million to $35.30 million.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, GENESIS ENERGY -LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • GENESIS ENERGY -LP 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, GENESIS ENERGY -LP increased its bottom line by earning $3.95 versus $1.19 in the prior year. For the next year, the market is expecting a contraction of 61.0% in earnings ($1.54 versus $3.95).
  • GEL, with its decline in revenue, slightly underperformed the industry average of 24.6%. Since the same quarter one year prior, revenues fell by 28.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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Pembina Pipeline

Dividend Yield: 4.90%

Pembina Pipeline

(NYSE:

PBA

) shares currently have a dividend yield of 4.90%.

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 169.39.

The average volume for Pembina Pipeline has been 263,100 shares per day over the past 30 days. Pembina Pipeline has a market cap of $11.8 billion and is part of the energy industry. Shares are up 35.4% year-to-date as of the close of trading on Friday.

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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 -49.84%.
  • 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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Magellan Midstream Partners

Dividend Yield: 4.10%

Magellan Midstream Partners

(NYSE:

MMP

) shares currently have a dividend yield of 4.10%.

Magellan Midstream Partners, L.P. engages in the transportation, storage, and distribution of refined petroleum products and crude oil in the United States. It operates through Refined Products, Crude Oil, and Marine Storage segments. The company has a P/E ratio of 44.74.

The average volume for Magellan Midstream Partners has been 850,200 shares per day over the past 30 days. Magellan Midstream Partners has a market cap of $17.6 billion and is part of the energy industry. Shares are up 11.5% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Magellan Midstream Partners

as a

buy

. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins, good cash flow from operations and notable return on equity. 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 12.8% when compared to the same quarter one year prior, going from $183.64 million to $207.07 million.
  • The gross profit margin for MAGELLAN MIDSTREAM PRTNRS LP is rather high; currently it is at 54.44%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 39.83% significantly outperformed against the industry average.
  • Net operating cash flow has slightly increased to $209.57 million or 9.67% when compared to the same quarter last year. In addition, MAGELLAN MIDSTREAM PRTNRS LP has also vastly surpassed the industry average cash flow growth rate of -49.84%.
  • Despite the weak revenue results, MMP has outperformed against the industry average of 24.6%. Since the same quarter one year prior, revenues slightly dropped by 2.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • After a year of stock price fluctuations, the net result is that MMP's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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