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."

Plains All American Pipeline

Dividend Yield: 9.80%

Plains All American Pipeline

(NYSE:

PAA

) shares currently have a dividend yield of 9.80%.

Plains All American Pipeline, L.P., through with its subsidiaries, engages in the transportation, storage, terminalling, and marketing of crude oil, natural gas liquids (NGL), natural gas, and refined products in the United States and Canada. The company has a P/E ratio of 23.50.

The average volume for Plains All American Pipeline has been 2,644,200 shares per day over the past 30 days. Plains All American Pipeline has a market cap of $11.3 billion and is part of the energy industry. Shares are down 45.1% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Plains All American Pipeline

as a

hold

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 78.41% to $562.00 million when compared to the same quarter last year. In addition, PLAINS ALL AMER PIPELNE -LP has also vastly surpassed the industry average cash flow growth rate of -27.14%.
  • Along with the very weak revenue results, PAA underperformed when compared to the industry average of 37.2%. Since the same quarter one year prior, revenues plummeted by 50.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The debt-to-equity ratio of 1.31 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PLAINS ALL AMER PIPELNE -LP's return on equity is below that of both the industry average and the S&P 500.

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NRG Energy

Dividend Yield: 4.30%

NRG Energy

(NYSE:

NRG

) shares currently have a dividend yield of 4.30%.

NRG Energy, Inc., together with its subsidiaries, operates as a power company.

The average volume for NRG Energy has been 7,023,000 shares per day over the past 30 days. NRG Energy has a market cap of $4.2 billion and is part of the utilities industry. Shares are down 50.6% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

NRG Energy

as a

hold

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

Highlights from the ratings report include:

  • Net operating cash flow has increased to $934.00 million or 25.53% when compared to the same quarter last year. In addition, NRG ENERGY INC has also vastly surpassed the industry average cash flow growth rate of -43.93%.
  • NRG ENERGY INC 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. 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, NRG ENERGY INC turned its bottom line around by earning $0.21 versus -$1.22 in the prior year. This year, the market expects an improvement in earnings ($0.34 versus $0.21).
  • Despite the weak revenue results, NRG has outperformed against the industry average of 15.7%. Since the same quarter one year prior, revenues slightly dropped by 3.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 Independent Power Producers & Energy Traders industry. The net income has significantly decreased by 60.7% when compared to the same quarter one year ago, falling from $168.00 million to $66.00 million.
  • The gross profit margin for NRG ENERGY INC is rather low; currently it is at 17.24%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.48% trails that of the industry average.

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FirstEnergy

Dividend Yield: 4.90%

FirstEnergy

(NYSE:

FE

) shares currently have a dividend yield of 4.90%.

FirstEnergy Corp., through its subsidiaries, generates, transmits, and distributes electricity in the United States. The company operates through Regulated Distribution, Regulated Transmission, and Competitive Energy Services segments. The company has a P/E ratio of 25.03.

The average volume for FirstEnergy has been 3,576,700 shares per day over the past 30 days. FirstEnergy has a market cap of $12.4 billion and is part of the utilities industry. Shares are down 25.3% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

FirstEnergy

as a

hold

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

Highlights from the ratings report include:

  • FE's revenue growth has slightly outpaced the industry average of 0.1%. Since the same quarter one year prior, revenues slightly increased by 6.1%. Growth in the company's revenue appears to have helped boost 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 Electric Utilities industry. The net income increased by 18.6% when compared to the same quarter one year prior, going from $333.00 million to $395.00 million.
  • FIRSTENERGY CORP has improved earnings per share by 17.7% 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, FIRSTENERGY CORP reported lower earnings of $0.50 versus $0.90 in the prior year. This year, the market expects an improvement in earnings ($2.70 versus $0.50).
  • Currently the debt-to-equity ratio of 1.76 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.32, which clearly demonstrates the inability to cover short-term cash needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Electric Utilities industry and the overall market, FIRSTENERGY CORP's return on equity is below that of both the industry average and the S&P 500.

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