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."

Western Gas Partners

Dividend Yield: 6.30%

Western Gas Partners (NYSE: WES) shares currently have a dividend yield of 6.30%.

Western Gas Partners, LP owns, operates, acquires, and develops midstream energy assets in the Rocky Mountains, the Mid-Continent, North-central Pennsylvania, and Texas. The company has a P/E ratio of 28.84.

The average volume for Western Gas Partners has been 380,500 shares per day over the past 30 days. Western Gas Partners has a market cap of $6.3 billion and is part of the energy industry. Shares are down 32.5% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Western Gas Partners as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and increase in net income. 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 revenue growth greatly exceeded the industry average of 34.1%. Since the same quarter one year prior, revenues rose by 16.4%. 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.
  • The debt-to-equity ratio is somewhat low, currently at 0.72, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.23, which illustrates the ability to avoid short-term cash problems.
  • 47.34% is the gross profit margin for WESTERN GAS PARTNERS LP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 27.46% significantly outperformed against the industry average.
  • Net operating cash flow has slightly increased to $145.43 million or 3.76% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -19.46%.
  • 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 11.4% when compared to the same quarter one year prior, going from $99.17 million to $110.52 million.

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Welltower

Dividend Yield: 4.80%

Welltower (NYSE: HCN) shares currently have a dividend yield of 4.80%.

Welltower Inc. is an independent equity real estate investment trust. The firm engages in acquiring, planning, developing, managing, repositioning and monetizing of real estate assets. It primarily invests in the real estate markets of the United States. The company has a P/E ratio of 27.28.

The average volume for Welltower has been 2,291,800 shares per day over the past 30 days. Welltower has a market cap of $24.1 billion and is part of the real estate industry. Shares are down 9.5% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Welltower as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, reasonable valuation levels and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • HCN's revenue growth has slightly outpaced the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 17.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • WELLTOWER INC 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. During the past fiscal year, WELLTOWER INC increased its bottom line by earning $1.40 versus $0.09 in the prior year. This year, the market expects an improvement in earnings ($2.40 versus $1.40).
  • 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 273.0% when compared to the same quarter one year prior, rising from $88.18 million to $328.93 million.
  • 36.37% is the gross profit margin for WELLTOWER INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 34.47% is above that of the industry average.

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Macquarie Infrastructure

Dividend Yield: 5.60%

Macquarie Infrastructure (NYSE: MIC) shares currently have a dividend yield of 5.60%.

Macquarie Infrastructure Company LLC, through its subsidiaries, owns, operates, and invests in infrastructure businesses that provide services to businesses and individuals primarily in the United States. The company has a P/E ratio of 5.84.

The average volume for Macquarie Infrastructure has been 652,600 shares per day over the past 30 days. Macquarie Infrastructure has a market cap of $6.3 billion and is part of the transportation industry. Shares are up 11.5% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Macquarie Infrastructure as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, reasonable valuation levels, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • MIC's very impressive revenue growth is slightly higher than the industry average of 45.4%. Since the same quarter one year prior, revenues leaped by 50.8%. 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.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Transportation Infrastructure industry and the overall market, MACQUARIE INFRASTRUCTURE CP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The gross profit margin for MACQUARIE INFRASTRUCTURE CP is rather high; currently it is at 54.29%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -14.89% is in-line with the industry average.
  • Net operating cash flow has slightly increased to $76.93 million or 6.46% when compared to the same quarter last year. Despite an increase in cash flow, MACQUARIE INFRASTRUCTURE CP's cash flow growth rate is still lower than the industry average growth rate of 30.94%.

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