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 "Hold."

ConocoPhillips

Dividend Yield: 6.30%

ConocoPhillips

(NYSE:

COP

) shares currently have a dividend yield of 6.30%.

ConocoPhillips explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids worldwide. The company has a P/E ratio of 35.17.

The average volume for ConocoPhillips has been 9,983,300 shares per day over the past 30 days. ConocoPhillips has a market cap of $57.7 billion and is part of the energy industry. Shares are down 31.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

ConocoPhillips

as a

hold

. 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from the ratings report include:

  • The current debt-to-equity ratio, 0.51, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.03, which illustrates the ability to avoid short-term cash problems.
  • 36.86% is the gross profit margin for CONOCOPHILLIPS which we consider to be strong. Regardless of COP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -2.15% trails the industry average.
  • COP, with its decline in revenue, slightly underperformed the industry average of 34.3%. Since the same quarter one year prior, revenues fell by 40.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • CONOCOPHILLIPS has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, CONOCOPHILLIPS reported lower earnings of $4.61 versus $6.43 in the prior year. For the next year, the market is expecting a contraction of 102.9% in earnings (-$0.14 versus $4.61).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 108.6% when compared to the same quarter one year ago, falling from $2,081.00 million to -$179.00 million.

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Targa Resources Partners

Dividend Yield: 10.90%

Targa Resources Partners

(NYSE:

NGLS

) shares currently have a dividend yield of 10.90%.

Targa Resources Partners LP owns, operates, acquires, and develops midstream energy assets in the United States. The company has a P/E ratio of 19.51.

The average volume for Targa Resources Partners has been 1,006,700 shares per day over the past 30 days. Targa Resources Partners has a market cap of $5.6 billion and is part of the energy industry. Shares are down 36.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Targa Resources Partners

as a

hold

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • Net operating cash flow has increased to $209.80 million or 49.43% when compared to the same quarter last year. In addition, TARGA RESOURCES PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -19.81%.
  • The debt-to-equity ratio is somewhat low, currently at 0.77, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.85 is somewhat weak and could be cause for future problems.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 57.9% when compared to the same quarter one year ago, falling from $108.80 million to $45.80 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TARGA RESOURCES PARTNERS LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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Questar

Dividend Yield: 4.50%

Questar

(NYSE:

STR

) shares currently have a dividend yield of 4.50%.

Questar Corporation operates as an integrated natural gas company in the United States. The company has a P/E ratio of 11.82.

The average volume for Questar has been 1,457,100 shares per day over the past 30 days. Questar has a market cap of $3.3 billion and is part of the utilities industry. Shares are down 25.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Questar

as a

hold

. The company's strengths can be seen in multiple areas, such as its increase in net income, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Gas Utilities industry average. The net income increased by 0.7% when compared to the same quarter one year prior, going from $40.30 million to $40.60 million.
  • 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. Compared to other companies in the Gas Utilities industry and the overall market, QUESTAR CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for QUESTAR CORP is currently very high, coming in at 77.77%. Regardless of STR's high profit margin, it has managed to decrease from the same period last year.
  • STR has underperformed the S&P 500 Index, declining 17.97% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The debt-to-equity ratio of 1.16 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.09, which clearly demonstrates the inability to cover short-term cash needs.

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