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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."

Western Gas Partners

Dividend Yield: 7.70%

Western Gas Partners

(NYSE:

WES

) shares currently have a dividend yield of 7.70%.

Western Gas Partners, LP owns, operates, acquires, and develops midstream energy assets in the Rocky Mountains, the Mid-Continent, North-central Pennsylvania, and Texas. The company has a P/E ratio of 21.39.

The average volume for Western Gas Partners has been 400,600 shares per day over the past 30 days. Western Gas Partners has a market cap of $5.2 billion and is part of the energy industry. Shares are down 47.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Western Gas Partners

TheStreet Recommends

as a

hold

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

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 36.8%. Since the same quarter one year prior, revenues slightly increased by 7.7%. 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 Oil, Gas & Consumable Fuels industry. The net income increased by 47.8% when compared to the same quarter one year prior, rising from $109.16 million to $161.31 million.
  • 43.73% is the gross profit margin for WESTERN GAS PARTNERS LP which we consider to be strong. Regardless of WES's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WES's net profit margin of 41.88% significantly outperformed against the industry.
  • WES's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 33.01%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, WESTERN GAS PARTNERS LP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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Select Income REIT

Dividend Yield: 10.00%

Select Income REIT

(NYSE:

SIR

) shares currently have a dividend yield of 10.00%.

Select Income REIT, a real estate investment trust (REIT), primarily owns and invests in single tenant and net leased properties. The company has a P/E ratio of 16.77.

The average volume for Select Income REIT has been 434,800 shares per day over the past 30 days. Select Income REIT has a market cap of $1.8 billion and is part of the real estate industry. Shares are down 19.6% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Select Income REIT

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels and increase in net income. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • SIR's very impressive revenue growth greatly exceeded the industry average of 6.1%. Since the same quarter one year prior, revenues leaped by 97.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for SELECT INCOME REIT is rather high; currently it is at 51.52%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, SIR's net profit margin of 27.48% compares favorably to the industry average.
  • SELECT INCOME REIT's earnings per share declined by 15.0% in the most recent quarter compared to 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, SELECT INCOME REIT reported lower earnings of $1.91 versus $2.11 in the prior year. For the next year, the market is expecting a contraction of 42.9% in earnings ($1.09 versus $1.91).
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, SELECT INCOME REIT's return on equity is below that of both the industry average and the S&P 500.

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Energy Transfer Partners

Dividend Yield: 13.90%

Energy Transfer Partners

(NYSE:

ETP

) shares currently have a dividend yield of 13.90%.

Energy Transfer Partners, L.P. engages in the natural gas midstream, and intrastate transportation and storage businesses in the United States. The company has a P/E ratio of 84.53.

The average volume for Energy Transfer Partners has been 5,060,800 shares per day over the past 30 days. Energy Transfer Partners has a market cap of $15.3 billion and is part of the energy industry. Shares are down 56.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Energy Transfer Partners

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 a generally disappointing performance in the stock itself, generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 104.27% to $860.00 million when compared to the same quarter last year. In addition, ENERGY TRANSFER PARTNERS -LP has also vastly surpassed the industry average cash flow growth rate of -26.50%.
  • Along with the very weak revenue results, ETP underperformed when compared to the industry average of 36.8%. Since the same quarter one year prior, revenues plummeted by 55.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 46.65%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 77.27% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, ETP is still more expensive than most of the other companies in its industry.
  • The debt-to-equity ratio of 1.30 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, ETP maintains a poor quick ratio of 0.86, which illustrates the inability to avoid short-term cash problems.

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