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."

Waddell & Reed Financial

Dividend Yield: 8.10%

Waddell & Reed Financial

(NYSE:

WDR

) shares currently have a dividend yield of 8.10%.

Waddell & Reed Financial, Inc., through its subsidiaries, provides investment management and advisory, investment product underwriting and distribution, and shareholder services administration to mutual funds, and institutional and separately managed accounts in the United States. The company has a P/E ratio of 7.75.

The average volume for Waddell & Reed Financial has been 1,471,500 shares per day over the past 30 days. Waddell & Reed Financial has a market cap of $1.9 billion and is part of the financial services industry. Shares are down 23.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Waddell & Reed Financial

as a

hold

. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • 35.51% is the gross profit margin for WADDELL&REED FINL INC which we consider to be strong. Regardless of WDR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WDR's net profit margin of 17.06% compares favorably to the industry average.
  • WDR, with its decline in revenue, slightly underperformed the industry average of 4.3%. Since the same quarter one year prior, revenues slightly dropped by 9.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 Capital Markets industry and the overall market, WADDELL&REED FINL INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The change in net income from the same quarter one year ago has exceeded that of the Capital Markets industry average, but is less than that of the S&P 500. The net income has decreased by 22.2% when compared to the same quarter one year ago, dropping from $80.89 million to $62.92 million.
  • WADDELL&REED FINL INC's earnings per share declined by 21.6% 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, WADDELL&REED FINL INC reported lower earnings of $2.94 versus $3.72 in the prior year. For the next year, the market is expecting a contraction of 27.2% in earnings ($2.14 versus $2.94).

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Cheniere Energy Partners

Dividend Yield: 7.10%

Cheniere Energy Partners

(AMEX:

CQP

) shares currently have a dividend yield of 7.10%.

Cheniere Energy Partners, L.P., through its subsidiary, Sabine Pass LNG, L.P., owns and operates the Sabine Pass liquefied natural gas (LNG) terminal located on the Sabine Pass deep water shipping channel.

The average volume for Cheniere Energy Partners has been 404,200 shares per day over the past 30 days. Cheniere Energy Partners has a market cap of $8.1 billion and is part of the energy industry. Shares are down 7% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Cheniere Energy Partners

as a

hold

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

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 Oil, Gas & Consumable Fuels industry. The net income increased by 44.2% when compared to the same quarter one year prior, rising from -$43.24 million to -$24.13 million.
  • Net operating cash flow has significantly increased by 88.06% to -$3.53 million when compared to the same quarter last year. In addition, CHENIERE ENERGY PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -39.19%.
  • CHENIERE ENERGY PARTNERS LP has improved earnings per share by 46.1% 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, CHENIERE ENERGY PARTNERS LP reported poor results of -$1.22 versus -$0.89 in the prior year. This year, the market expects an improvement in earnings (-$0.37 versus -$1.22).
  • CQP has underperformed the S&P 500 Index, declining 24.22% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CHENIERE ENERGY PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.

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NRG Energy

Dividend Yield: 5.50%

NRG Energy

(NYSE:

NRG

) shares currently have a dividend yield of 5.50%.

NRG Energy, Inc., together with its subsidiaries, operates as a power company.

The average volume for NRG Energy has been 8,644,200 shares per day over the past 30 days. NRG Energy has a market cap of $3.3 billion and is part of the utilities industry. Shares are down 12.3% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

NRG Energy

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 unimpressive growth in net income, poor profit margins and generally higher debt management risk.

Highlights from the ratings report include:

  • Net operating cash flow has increased to $934.00 million or 25.53% when compared to the same quarter last year. In addition, NRG ENERGY INC has also modestly surpassed the industry average cash flow growth rate of 16.58%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.1%. Since the same quarter one year prior, revenues slightly dropped by 3.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for NRG ENERGY INC is rather low; currently it is at 17.24%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.48% trails that of the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Independent Power Producers & Energy Traders industry. The net income has significantly decreased by 60.7% when compared to the same quarter one year ago, falling from $168.00 million to $66.00 million.

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