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."

Investors Real Estate

Dividend Yield: 7.40%

Investors Real Estate

(NYSE:

IRET

) shares currently have a dividend yield of 7.40%.

Investors Real Estate Trust is a real estate investment trust. The trust invests in real estate markets of United States. It is primarily engaged in investment and operation of the the real estate assets. The company has a P/E ratio of 50.07.

The average volume for Investors Real Estate has been 510,900 shares per day over the past 30 days. Investors Real Estate has a market cap of $848.6 million and is part of the real estate industry. Shares are down 12.7% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Investors Real Estate

as a

hold

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

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 Real Estate Investment Trusts (REITs) industry. The net income increased by 375.4% when compared to the same quarter one year prior, rising from $8.37 million to $39.80 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.1%. Since the same quarter one year prior, revenues slightly increased by 5.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • 35.52% is the gross profit margin for INVESTORS REAL ESTATE TRUST which we consider to be strong. Regardless of IRET's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, IRET's net profit margin of 70.63% significantly outperformed against the industry.
  • IRET has underperformed the S&P 500 Index, declining 6.30% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • Net operating cash flow has significantly decreased to $12.62 million or 55.79% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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Rose Rock Midstream

Dividend Yield: 16.20%

Rose Rock Midstream

(NYSE:

RRMS

) shares currently have a dividend yield of 16.20%.

Rose Rock Midstream, L.P. owns, operates, develops, and acquires a portfolio of midstream energy assets. It gathers, transports, stores, distributes, and markets crude oil in Colorado, Kansas, Minnesota, Montana, North Dakota, Ohio, Oklahoma, Pennsylvania, Texas, and Wyoming. The company has a P/E ratio of 20.65.

The average volume for Rose Rock Midstream has been 236,400 shares per day over the past 30 days. Rose Rock Midstream has a market cap of $600.2 million and is part of the energy industry. Shares are up 19.5% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Rose Rock Midstream

as a

hold

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:

  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 34.2%. Since the same quarter one year prior, revenues fell by 27.0%. 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 against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 89.5% when compared to the same quarter one year ago, falling from $15.09 million to $1.58 million.
  • The debt-to-equity ratio is very high at 3.23 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, RRMS maintains a poor quick ratio of 0.90, which illustrates the inability to avoid short-term cash problems.

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Seadrill Partners

Dividend Yield: 19.80%

Seadrill Partners

(NYSE:

SDLP

) shares currently have a dividend yield of 19.80%.

Seadrill Partners LLC owns, operates, and acquires offshore drilling units. The company primarily serves various oil and gas companies. As of March 31, 2015, its fleet consisted of four semi-submersible drilling rigs, three drillships, and three tender rigs. The company has a P/E ratio of 2.35.

The average volume for Seadrill Partners has been 1,396,600 shares per day over the past 30 days. Seadrill Partners has a market cap of $464.6 million and is part of the energy industry. Shares are up 50.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Seadrill Partners

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 36.0%. Since the same quarter one year prior, revenues rose by 22.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SEADRILL PARTNERS LLC reported significant earnings per share improvement 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, SEADRILL PARTNERS LLC increased its bottom line by earning $2.80 versus $1.72 in the prior year. This year, the market expects an improvement in earnings ($3.50 versus $2.80).
  • SDLP'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 62.04%, 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 debt-to-equity ratio is very high at 4.13 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, SDLP maintains a poor quick ratio of 0.86, which illustrates the inability to avoid short-term cash problems.

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