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."

STMicroelectronics

Dividend Yield: 7.10%

STMicroelectronics

(NYSE:

STM

) shares currently have a dividend yield of 7.10%.

STMicroelectronics N.V. designs, develops, manufactures, and markets various semiconductor integrated circuits and discrete devices worldwide. The company has a P/E ratio of 41.57.

The average volume for STMicroelectronics has been 924,000 shares per day over the past 30 days. STMicroelectronics has a market cap of $5.0 billion and is part of the electronics industry. Shares are down 15.3% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

STMicroelectronics

as a

hold

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, STM has a quick ratio of 1.88, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 45.08% is the gross profit margin for STMICROELECTRONICS NV which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, STM's net profit margin of 0.11% significantly trails the industry average.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.3%. Since the same quarter one year prior, revenues slightly dropped by 8.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Net operating cash flow has decreased to $245.00 million or 21.22% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • 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 Semiconductors & Semiconductor Equipment industry and the overall market, STMICROELECTRONICS NV's return on equity significantly trails that of both the industry average and the S&P 500.

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Rose Rock Midstream

Dividend Yield: 19.20%

Rose Rock Midstream

(NYSE:

RRMS

) shares currently have a dividend yield of 19.20%.

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 16.49.

The average volume for Rose Rock Midstream has been 295,900 shares per day over the past 30 days. Rose Rock Midstream has a market cap of $506.3 million and is part of the energy industry. Shares are down 15.8% year-to-date as of the close of trading on Monday.

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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 feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 34.6%. 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.

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BP Prudhoe Bay Royalty

Dividend Yield: 13.70%

BP Prudhoe Bay Royalty

(NYSE:

BPT

) shares currently have a dividend yield of 13.70%.

BP Prudhoe Bay Royalty Trust operates as a grantor trust in the United States. The company holds overriding royalty interest comprising a non-operational interest in minerals in the Prudhoe Bay oil field located on the North Slope of Alaska. The company has a P/E ratio of 6.78.

The average volume for BP Prudhoe Bay Royalty has been 503,400 shares per day over the past 30 days. BP Prudhoe Bay Royalty has a market cap of $374.7 million and is part of the energy industry. Shares are down 37.7% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

BP Prudhoe Bay Royalty

as a

hold

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • BPT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.35, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for BP PRUDHOE BAY ROYALTY TRUST is currently very high, coming in at 100.00%. BPT has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, BPT's net profit margin of 98.87% significantly outperformed against the industry.
  • BP PRUDHOE BAY ROYALTY TRUST 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 not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, BP PRUDHOE BAY ROYALTY TRUST increased its bottom line by earning $10.60 versus $9.04 in the prior year.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, BP PRUDHOE BAY ROYALTY TRUST's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 67.56%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 51.48% compared to the year-earlier 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.

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