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."

TCP Capital

Dividend Yield: 9.70%

TCP Capital (NASDAQ: TCPC) shares currently have a dividend yield of 9.70%.

TCP Capital Corp. is a business development company specializing in direct equity and debt investments in middle-market, senior secured loans, junior loans, originated loans, mezzanine, senior debt instruments, bonds, and secondary-market investments. It seeks to invest in the United States. The company has a P/E ratio of 9.55.

The average volume for TCP Capital has been 156,200 shares per day over the past 30 days. TCP Capital has a market cap of $724.6 million and is part of the financial services industry. Shares are down 10.3% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates TCP Capital as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, good cash flow from operations, expanding profit margins and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • TCPC's very impressive revenue growth greatly exceeded the industry average of 6.9%. Since the same quarter one year prior, revenues leaped by 58.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 58.6% when compared to the same quarter one year prior, rising from $12.40 million to $19.67 million.
  • Net operating cash flow has significantly increased by 131.58% to $23.42 million when compared to the same quarter last year. In addition, TCP CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of -433.20%.
  • The gross profit margin for TCP CAPITAL CORP is currently very high, coming in at 80.40%. Regardless of TCPC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TCPC's net profit margin of 50.51% significantly outperformed against the industry.
  • TCP CAPITAL CORP has improved earnings per share by 30.3% 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, TCP CAPITAL CORP reported lower earnings of $0.96 versus $1.94 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $0.96).

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Rose Rock Midstream

Dividend Yield: 8.60%

Rose Rock Midstream (NYSE: RRMS) shares currently have a dividend yield of 8.60%.

Rose Rock Midstream, L.P. owns, operates, develops, and acquires a portfolio of midstream energy assets. The company gathers, transports, stores, distributes, and markets crude oil in Colorado, Kansas, Louisiana, Montana, New Mexico, North Dakota, Ohio, Oklahoma, Texas, and Wyoming. The company has a P/E ratio of 20.93.

The average volume for Rose Rock Midstream has been 120,300 shares per day over the past 30 days. Rose Rock Midstream has a market cap of $1.1 billion and is part of the energy industry. Shares are down 36.8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Rose Rock Midstream as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, notable return on equity, reasonable valuation levels and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

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 55.1% when compared to the same quarter one year prior, rising from $11.01 million to $17.07 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ROSE ROCK MIDSTREAM LP's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 375.23% to $26.94 million when compared to the same quarter last year. In addition, ROSE ROCK MIDSTREAM LP has also vastly surpassed the industry average cash flow growth rate of -20.54%.
  • Despite the weak revenue results, RRMS has outperformed against the industry average of 34.6%. Since the same quarter one year prior, revenues fell by 23.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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TC Pipelines

Dividend Yield: 7.10%

TC Pipelines (NYSE: TCP) shares currently have a dividend yield of 7.10%.

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 18.39.

The average volume for TC Pipelines has been 154,900 shares per day over the past 30 days. TC Pipelines has a market cap of $3.2 billion and is part of the energy industry. Shares are down 29.8% 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 revenue growth, growth in earnings per share, increase in net income, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 34.6%. Since the same quarter one year prior, revenues slightly increased by 3.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • TC PIPELINES LP has improved earnings per share by 13.8% 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 ($3.06 versus $2.67).
  • 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 18.9% when compared to the same quarter one year prior, going from $37.00 million to $44.00 million.
  • The gross profit margin for TC PIPELINES LP is currently very high, coming in at 78.82%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 51.76% significantly outperformed against the industry average.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, TC PIPELINES LP's return on equity is below that of both the industry average and the S&P 500.

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