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."

Sunoco Logistics Partners

Dividend Yield: 6.90%

Sunoco Logistics Partners (NYSE: SXL) shares currently have a dividend yield of 6.90%.

Sunoco Logistics Partners L.P. transports, terminals, and stores crude oil, refined products, and natural gas liquids (NGLs). The company has a P/E ratio of 40.59.

The average volume for Sunoco Logistics Partners has been 1,507,100 shares per day over the past 30 days. Sunoco Logistics Partners has a market cap of $8.4 billion and is part of the energy industry. Shares are up 11.2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Sunoco Logistics Partners as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, reasonable valuation levels, good cash flow from operations, impressive record of earnings per share growth and notable return on equity. 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 302.8% when compared to the same quarter one year prior, rising from $36.00 million to $145.00 million.
  • Net operating cash flow has significantly increased by 257.89% to $120.00 million when compared to the same quarter last year. In addition, SUNOCO LOGISTICS PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -49.17%.
  • 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, SUNOCO LOGISTICS PARTNERS LP's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • SUNOCO LOGISTICS PARTNERS LP reported significant earnings per share improvement 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, SUNOCO LOGISTICS PARTNERS LP reported lower earnings of $0.45 versus $0.56 in the prior year. This year, the market expects an improvement in earnings ($0.92 versus $0.45).

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DineEquity

Dividend Yield: 4.40%

DineEquity (NYSE: DIN) shares currently have a dividend yield of 4.40%.

DineEquity, Inc., together with its subsidiaries, owns, franchises, operates, and rents full-service restaurants in the United States and internationally. The company has a P/E ratio of 15.34.

The average volume for DineEquity has been 240,100 shares per day over the past 30 days. DineEquity has a market cap of $1.5 billion and is part of the leisure industry. Shares are down 2.6% year-to-date as of the close of trading on Wednesday.

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

Highlights from the ratings report include:
  • The gross profit margin for DINEEQUITY INC is rather high; currently it is at 64.22%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.62% is above that of the industry average.
  • 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. In comparison to other companies in the Hotels, Restaurants & Leisure industry and the overall market on the basis of return on equity, DINEEQUITY INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • DINEEQUITY INC's earnings per share declined by 6.8% 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, DINEEQUITY INC increased its bottom line by earning $5.50 versus $1.89 in the prior year. This year, the market expects an improvement in earnings ($6.10 versus $5.50).
  • DIN, with its decline in revenue, underperformed when compared the industry average of 11.4%. Since the same quarter one year prior, revenues slightly dropped by 7.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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Pitney Bowes

Dividend Yield: 4.10%

Pitney Bowes (NYSE: PBI) shares currently have a dividend yield of 4.10%.

Pitney Bowes Inc. provides technology products and solutions in the United States and internationally. The company operates in three segments: Small & Medium Business Solutions; Enterprise Business Solutions; and Digital Commerce Solutions. The company has a P/E ratio of 9.49.

The average volume for Pitney Bowes has been 1,627,600 shares per day over the past 30 days. Pitney Bowes has a market cap of $3.4 billion and is part of the consumer durables industry. Shares are down 11.5% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Pitney Bowes as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The gross profit margin for PITNEY BOWES INC is rather high; currently it is at 63.77%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.87% trails the industry average.
  • PBI, with its decline in revenue, underperformed when compared the industry average of 7.7%. Since the same quarter one year prior, revenues slightly dropped by 5.2%. The declining revenue appears to have seeped down to the company's 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 Commercial Services & Supplies industry and the overall market, PITNEY BOWES INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • PITNEY BOWES INC's earnings per share declined by 25.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, PITNEY BOWES INC increased its bottom line by earning $2.00 versus $1.48 in the prior year. For the next year, the market is expecting a contraction of 10.0% in earnings ($1.80 versus $2.00).
  • The debt-to-equity ratio is very high at 24.70 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, PBI's quick ratio is somewhat strong at 1.03, demonstrating the ability to handle short-term liquidity needs.

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