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."

Holly Energy Partners

Dividend Yield: 7.40%

Holly Energy Partners

(NYSE:

HEP

) shares currently have a dividend yield of 7.40%.

Holly Energy Partners, L.P. owns and operates petroleum product and crude pipelines, storage tanks, distribution terminals, and loading rack facilities. The company has a P/E ratio of 19.09.

The average volume for Holly Energy Partners has been 198,500 shares per day over the past 30 days. Holly Energy Partners has a market cap of $1.8 billion and is part of the energy industry. Shares are down 1.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Holly Energy Partners

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a decline in the stock price during the past year.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 34.5%. Since the same quarter one year prior, revenues slightly increased by 10.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • HOLLY ENERGY PARTNERS LP has improved earnings per share by 48.5% 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, HOLLY ENERGY PARTNERS LP increased its bottom line by earning $1.60 versus $1.20 in the prior year. This year, the market expects an improvement in earnings ($1.74 versus $1.60).
  • HEP is off 5.13% from its price level of one year ago, reflecting the general market trend and ignoring their higher earnings per share compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The debt-to-equity ratio is very high at 3.49 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.

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Terra Nitrogen

Dividend Yield: 11.20%

Terra Nitrogen

(NYSE:

TNH

) shares currently have a dividend yield of 11.20%.

Terra Nitrogen Company, L.P. produces nitrogen fertilizer products in the United States. It primarily offers anhydrous ammonia and urea ammonium nitrate solutions for farmers to improve the yield and quality of their crops. Terra Nitrogen GP Inc. serves as the general partner of the company. The company has a P/E ratio of 10.27.

The average volume for Terra Nitrogen has been 32,900 shares per day over the past 30 days. Terra Nitrogen has a market cap of $1.9 billion and is part of the chemicals industry. Shares are up 2.7% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Terra Nitrogen

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

Highlights from the ratings report include:

  • TNH has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.68, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for TERRA NITROGEN CO -LP is rather high; currently it is at 54.86%. Regardless of TNH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TNH's net profit margin of 52.34% significantly outperformed against the industry.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.7%. Since the same quarter one year prior, revenues slightly dropped by 9.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • TERRA NITROGEN CO -LP's earnings per share declined by 18.4% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, TERRA NITROGEN CO -LP reported lower earnings of $10.06 versus $12.07 in the prior year.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Chemicals industry average. The net income has decreased by 16.6% when compared to the same quarter one year ago, dropping from $95.00 million to $79.20 million.

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Student Transportation

Dividend Yield: 9.10%

Student Transportation

(NASDAQ:

STB

) shares currently have a dividend yield of 9.10%.

Student Transportation Inc., together with its subsidiaries, provides student transportation solutions in North America. The company offers contracted, managed, special needs transportation, direct-to-parent, and charter services.

The average volume for Student Transportation has been 177,000 shares per day over the past 30 days. Student Transportation has a market cap of $467.5 million and is part of the transportation industry. Shares are up 32.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Student Transportation

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 16.9%. Since the same quarter one year prior, revenues slightly increased by 6.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Road & Rail industry. The net income increased by 56.4% when compared to the same quarter one year prior, rising from $3.54 million to $5.53 million.
  • STUDENT TRANSPORTATION INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable Earnings per share over the past year indicate the company has sound management over its earnings and share float. During the past fiscal year, STUDENT TRANSPORTATION INC's EPS of $0.02 remained unchanged from the prior years' EPS of $0.02.
  • Net operating cash flow has decreased to $4.03 million or 46.52% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • STB has underperformed the S&P 500 Index, declining 15.83% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

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