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."

TECO Energy

Dividend Yield: 4.70%

TECO Energy (NYSE: TE) shares currently have a dividend yield of 4.70%.

TECO Energy, Inc., an electric and gas utility holding company, is engaged in the regulated electric and gas utility operations. The company has a P/E ratio of 20.61.

The average volume for TECO Energy has been 2,420,900 shares per day over the past 30 days. TECO Energy has a market cap of $4.5 billion and is part of the utilities industry. Shares are down 7.7% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates TECO Energy as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 2.9%. Since the same quarter one year prior, revenues rose by 23.7%. 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.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • TECO ENERGY INC's earnings per share declined by 35.3% 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, TECO ENERGY INC increased its bottom line by earning $0.92 versus $0.88 in the prior year. This year, the market expects an improvement in earnings ($1.10 versus $0.92).
  • Net operating cash flow has slightly increased to $158.60 million or 4.00% when compared to the same quarter last year. Despite an increase in cash flow, TECO ENERGY INC's cash flow growth rate is still lower than the industry average growth rate of 45.60%.
  • Even though the current debt-to-equity ratio is 1.46, it is still below the industry average, suggesting that this level of debt is acceptable within the Multi-Utilities industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.22 is very low and demonstrates very weak liquidity.

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Mercury General

Dividend Yield: 4.50%

Mercury General (NYSE: MCY) shares currently have a dividend yield of 4.50%.

Mercury General Corporation, together with its subsidiaries, writes personal automobile insurance. The company also writes homeowners, commercial automobile, commercial property, mechanical breakdown, fire, and umbrella insurance. The company has a P/E ratio of 16.89.

The average volume for Mercury General has been 275,400 shares per day over the past 30 days. Mercury General has a market cap of $3.0 billion and is part of the insurance industry. Shares are down 4.6% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Mercury General as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, notable return on equity and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • MCY's revenue growth trails the industry average of 21.0%. Since the same quarter one year prior, revenues slightly increased by 1.7%. 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.
  • MCY's debt-to-equity ratio is very low at 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • Net operating cash flow has increased to $47.04 million or 17.33% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.60%.
  • 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. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, MERCURY GENERAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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TC Pipelines

Dividend Yield: 5.30%

TC Pipelines (NYSE: TCP) shares currently have a dividend yield of 5.30%.

TC PipeLines, LP acquires, owns, and participates in the management of energy infrastructure businesses in North America. The company has a P/E ratio of 23.58.

The average volume for TC Pipelines has been 206,500 shares per day over the past 30 days. TC Pipelines has a market cap of $4.0 billion and is part of the energy industry. Shares are down 10.7% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates TC Pipelines as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, expanding profit margins, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • TC PIPELINES LP has improved earnings per share by 12.7% 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, TC PIPELINES LP increased its bottom line by earning $2.67 versus $2.13 in the prior year. This year, the market expects an improvement in earnings ($2.82 versus $2.67).
  • 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 Oil, Gas & Consumable Fuels industry average. The net income increased by 14.6% when compared to the same quarter one year prior, going from $41.00 million to $47.00 million.
  • The gross profit margin for TC PIPELINES LP is currently very high, coming in at 77.01%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 54.02% significantly outperformed against the industry average.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 42.02% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • Despite the weak revenue results, TCP has outperformed against the industry average of 19.8%. Since the same quarter one year prior, revenues slightly dropped by 1.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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