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."

Tesoro Logistics

Dividend Yield: 5.90%

Tesoro Logistics

(NYSE:

TLLP

) shares currently have a dividend yield of 5.90%.

Tesoro Logistics LP owns, operates, develops, and acquires logistics assets related to crude oil and refined products in the United States. It operates in three segments: Gathering, Processing, and Terminalling and Transportation. The company has a P/E ratio of 46.72.

The average volume for Tesoro Logistics has been 334,200 shares per day over the past 30 days. Tesoro Logistics has a market cap of $4.3 billion and is part of the energy industry. Shares are down 17.8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Tesoro Logistics

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, good cash flow from operations and compelling growth in net income. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • TLLP's very impressive revenue growth greatly exceeded the industry average of 34.6%. Since the same quarter one year prior, revenues leaped by 107.7%. 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 TESORO LOGISTICS LP is rather high; currently it is at 65.82%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 24.00% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 277.50% to $70.00 million when compared to the same quarter last year. In addition, TESORO LOGISTICS LP has also vastly surpassed the industry average cash flow growth rate of -20.54%.
  • 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 112.2% when compared to the same quarter one year prior, rising from $31.11 million to $66.00 million.
  • TESORO LOGISTICS LP's earnings per share declined by 23.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, TESORO LOGISTICS LP reported lower earnings of $1.42 versus $1.45 in the prior year. This year, the market expects an improvement in earnings ($2.61 versus $1.42).

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Diamondrock Hospitality

Dividend Yield: 4.30%

Diamondrock Hospitality

(NYSE:

DRH

) shares currently have a dividend yield of 4.30%.

DiamondRock Hospitality Company, a lodging focused real estate company, owns premium hotels and resorts in North America. The company has a P/E ratio of 16.15.

The average volume for Diamondrock Hospitality has been 2,195,500 shares per day over the past 30 days. Diamondrock Hospitality has a market cap of $2.3 billion and is part of the real estate industry. Shares are down 23.7% year-to-date as of the close of trading on Tuesday.

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TheStreet Recommends

TheStreet Ratings rates

Diamondrock Hospitality

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.7%. Since the same quarter one year prior, revenues slightly increased by 8.2%. 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.
  • Net operating cash flow has increased to $65.54 million or 19.34% when compared to the same quarter last year. In addition, DIAMONDROCK HOSPITALITY CO has also modestly surpassed the industry average cash flow growth rate of 15.86%.
  • 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, DIAMONDROCK HOSPITALITY CO's return on equity is below that of both the industry average and the S&P 500.
  • DIAMONDROCK HOSPITALITY CO 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, DIAMONDROCK HOSPITALITY CO increased its bottom line by earning $0.82 versus $0.12 in the prior year. For the next year, the market is expecting a contraction of 45.5% in earnings ($0.45 versus $0.82).

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Kimco Realty

Dividend Yield: 4.10%

Kimco Realty

(NYSE:

KIM

) shares currently have a dividend yield of 4.10%.

Kimco Realty Corporation is an independent real estate investment trust. The firm invests in the real estate markets across North America. It is primarily engaged in acquisitions, development, and management of neighborhood and community shopping centers. The company has a P/E ratio of 17.52.

The average volume for Kimco Realty has been 2,994,600 shares per day over the past 30 days. Kimco Realty has a market cap of $9.6 billion and is part of the real estate industry. Shares are down 10.1% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Kimco Realty

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels, expanding profit margins, compelling growth in net income and solid stock price performance. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • KIM's revenue growth has slightly outpaced the industry average of 9.7%. Since the same quarter one year prior, revenues rose by 18.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • 43.14% is the gross profit margin for KIMCO REALTY CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 35.77% is above that of the industry average.
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 41.9% when compared to the same quarter one year prior, rising from $89.51 million to $127.00 million.
  • KIMCO REALTY CORP reported flat earnings per share in the most recent quarter. 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, KIMCO REALTY CORP increased its bottom line by earning $0.80 versus $0.54 in the prior year. This year, the market expects an improvement in earnings ($1.32 versus $0.80).

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