Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer

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."

National Penn

Dividend Yield: 4.10%

National Penn

(NASDAQ:

NPBC

) shares currently have a dividend yield of 4.10%.

National Penn Bancshares, Inc. operates as the bank holding company for National Penn Bank that provides commercial banking products and services to residents and businesses primarily in eastern and central Pennsylvania. The company has a P/E ratio of 15.37.

The average volume for National Penn has been 915,300 shares per day over the past 30 days. National Penn has a market cap of $1.5 billion and is part of the banking industry. Shares are up 2.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

National Penn

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, compelling growth in net income, expanding profit margins and attractive valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • NPBC's revenue growth has slightly outpaced the industry average of 1.7%. Since the same quarter one year prior, revenues slightly increased by 4.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • NATIONAL PENN BANCSHARES INC has improved earnings per share by 13.3% 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. We feel that this trend should continue. During the past fiscal year, NATIONAL PENN BANCSHARES INC increased its bottom line by earning $0.70 versus $0.37 in the prior year. This year, the market expects an improvement in earnings ($0.77 versus $0.70).
  • 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 Commercial Banks industry average. The net income increased by 15.4% when compared to the same quarter one year prior, going from $21.21 million to $24.48 million.
  • The gross profit margin for NATIONAL PENN BANCSHARES INC is currently very high, coming in at 88.08%. Regardless of NPBC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NPBC's net profit margin of 24.61% significantly outperformed against the industry.

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Seagate Technology

Dividend Yield: 4.10%

Seagate Technology

(NASDAQ:

STX

) shares currently have a dividend yield of 4.10%.

Seagate Technology Public Limited Company designs, manufactures, and sells electronic data storage products in the Asia Pacific, the Americas, and EMEA countries. The company has a P/E ratio of 8.83.

The average volume for Seagate Technology has been 3,745,200 shares per day over the past 30 days. Seagate Technology has a market cap of $17.5 billion and is part of the computer hardware industry. Shares are down 17.8% year-to-date as of the close of trading on Thursday.

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TheStreet Recommends

TheStreet Ratings rates

Seagate Technology

as a

buy

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, attractive valuation levels, good cash flow from operations and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows low profit margins.

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 Computers & Peripherals industry. The net income increased by 118.0% when compared to the same quarter one year prior, rising from $428.00 million to $933.00 million.
  • STX's revenue growth trails the industry average of 31.8%. Since the same quarter one year prior, revenues slightly increased by 4.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 68.57% to $1,443.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 51.71%.
  • SEAGATE TECHNOLOGY PLC reported significant earnings per share improvement 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, SEAGATE TECHNOLOGY PLC reported lower earnings of $4.52 versus $4.79 in the prior year. This year, the market expects an improvement in earnings ($4.85 versus $4.52).

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Targa Resources Partners

Dividend Yield: 7.70%

Targa Resources Partners

(NYSE:

NGLS

) shares currently have a dividend yield of 7.70%.

Targa Resources Partners LP owns, operates, acquires, and develops midstream energy assets in the United States. The company has a P/E ratio of 15.23.

The average volume for Targa Resources Partners has been 1,021,300 shares per day over the past 30 days. Targa Resources Partners has a market cap of $5.0 billion and is part of the energy industry. Shares are down 9.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Targa Resources Partners

as a

buy

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and notable return on equity. We feel these 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:

  • Net operating cash flow has significantly increased by 97.40% to $266.70 million 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 -13.07%.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, TARGA RESOURCES PARTNERS LP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Despite the weak revenue results, NGLS has outperformed against the industry average of 19.8%. Since the same quarter one year prior, revenues slightly dropped by 3.4%. Weakness in the company's revenue seems to have hurt the 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 0.5% when compared to the same quarter one year ago, dropping from $108.60 million to $108.10 million.

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