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."

Spirit Realty Capital

Dividend Yield: 5.30%

Spirit Realty Capital (NYSE: SRC) shares currently have a dividend yield of 5.30%.

Spirit Realty Capital, Inc is a publicly traded real estate investment trust.

The average volume for Spirit Realty Capital has been 5,176,800 shares per day over the past 30 days. Spirit Realty Capital has a market cap of $6.3 billion and is part of the real estate industry. Shares are up 31.8% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Spirit Realty Capital as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, reasonable valuation levels, good cash flow from operations and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, SRC's share price has jumped by 28.44%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SRC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.9%. Since the same quarter one year prior, revenues slightly increased by 3.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Net operating cash flow has increased to $89.64 million or 12.59% when compared to the same quarter last year. In addition, SPIRIT REALTY CAPITAL INC has also modestly surpassed the industry average cash flow growth rate of 11.39%.
  • SPIRIT REALTY CAPITAL INC reported flat earnings per share in the most recent quarter. 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, SPIRIT REALTY CAPITAL INC turned its bottom line around by earning $0.27 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($0.31 versus $0.27).

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Western Gas Equity Partners

Dividend Yield: 4.40%

Western Gas Equity Partners (NYSE: WGP) shares currently have a dividend yield of 4.40%.

Western Gas Equity Partners, LP gathers, processes, compresses, treats, and transports natural gas, condensate, NGLs and crude oil primarily in the United States. The company has a P/E ratio of 27.16.

The average volume for Western Gas Equity Partners has been 485,000 shares per day over the past 30 days. Western Gas Equity Partners has a market cap of $8.4 billion and is part of the energy industry. Shares are up 4.9% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Western Gas Equity Partners 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, expanding profit margins, good cash flow from operations and impressive record of earnings per share growth. 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 599.7% when compared to the same quarter one year prior, rising from -$16.37 million to $81.82 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, WESTERN GAS EQUITY PRTNRS LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for WESTERN GAS EQUITY PRTNRS LP is rather high; currently it is at 52.48%. It has increased significantly from the same period last year. Along with this, the net profit margin of 21.35% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 51.73% to $235.88 million when compared to the same quarter last year. In addition, WESTERN GAS EQUITY PRTNRS LP has also vastly surpassed the industry average cash flow growth rate of -49.80%.
  • WESTERN GAS EQUITY PRTNRS 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, WESTERN GAS EQUITY PRTNRS LP reported lower earnings of $0.51 versus $1.09 in the prior year. This year, the market expects an improvement in earnings ($1.36 versus $0.51).

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TC Pipelines

Dividend Yield: 6.50%

TC Pipelines (NYSE: TCP) shares currently have a dividend yield of 6.50%.

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 287.74.

The average volume for TC Pipelines has been 178,300 shares per day over the past 30 days. TC Pipelines has a market cap of $3.7 billion and is part of the energy industry. Shares are up 10.6% year-to-date as of the close of trading on Wednesday.

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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 increase in net income, expanding profit margins, good cash flow from operations and growth in earnings per share. 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 28.1% when compared to the same quarter one year prior, rising from $57.00 million to $73.00 million.
  • The gross profit margin for TC PIPELINES LP is currently very high, coming in at 82.56%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 84.88% significantly outperformed against the industry average.
  • Net operating cash flow has slightly increased to $92.00 million or 5.74% when compared to the same quarter last year. In addition, TC PIPELINES LP has also vastly surpassed the industry average cash flow growth rate of -49.80%.
  • TC PIPELINES LP has improved earnings per share by 25.0% 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, TC PIPELINES LP reported lower earnings of $0.00 versus $2.67 in the prior year. This year, the market expects an increase in earnings to $3.12 from $0.00.
  • Despite the weak revenue results, TCP has outperformed against the industry average of 24.0%. 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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