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."

BT Group

Dividend Yield: 5.20%

BT Group (NYSE: BT) shares currently have a dividend yield of 5.20%.

BT Group plc provides communications services worldwide.

The average volume for BT Group has been 441,800 shares per day over the past 30 days. BT Group has a market cap of $52.1 billion and is part of the telecommunications industry. Shares are down 25.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates BT Group as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, increase in net income and expanding profit margins. 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 came in higher than the industry average of 19.8%. Since the same quarter one year prior, revenues rose by 31.1%. 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.
  • Net operating cash flow has significantly increased by 68.69% to $2,677.59 million when compared to the same quarter last year. In addition, BT GROUP PLC has also vastly surpassed the industry average cash flow growth rate of 0.13%.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Diversified Telecommunication Services industry average. The net income increased by 11.0% when compared to the same quarter one year prior, going from $919.45 million to $1,020.34 million.
  • 35.92% is the gross profit margin for BT GROUP PLC which we consider to be strong. Regardless of BT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BT's net profit margin of 13.33% compares favorably to the industry average.
  • BT GROUP PLC's earnings per share declined by 6.3% 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, BT GROUP PLC increased its bottom line by earning $2.11 versus $1.93 in the prior year. For the next year, the market is expecting a contraction of 2.1% in earnings ($2.06 versus $2.11).

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Southern

Dividend Yield: 4.20%

Southern (NYSE: SO) shares currently have a dividend yield of 4.20%.

The Southern Company, together with its subsidiaries, engages in the generation, transmission, and distribution of electricity through coal, nuclear, oil and gas, and hydro resources in the states of Alabama, Georgia, Florida, and Mississippi. The company has a P/E ratio of 20.75.

The average volume for Southern has been 5,612,800 shares per day over the past 30 days. Southern has a market cap of $49.0 billion and is part of the utilities industry. Shares are up 15.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Southern as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins, solid stock price performance, notable return on equity and reasonable valuation levels. 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:
  • 38.59% is the gross profit margin for SOUTHERN CO which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 12.50% is above that of 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. Compared to other companies in the Electric Utilities industry and the overall market on the basis of return on equity, SOUTHERN CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite 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.
  • SOUTHERN CO's earnings per share declined by 5.3% 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, SOUTHERN CO increased its bottom line by earning $2.60 versus $2.18 in the prior year. This year, the market expects an improvement in earnings ($2.85 versus $2.60).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.5%. 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.

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ONEOK Partners

Dividend Yield: 7.60%

ONEOK Partners (NYSE: OKS) shares currently have a dividend yield of 7.60%.

ONEOK Partners, L.P. engages in the gathering, processing, storage, and transportation of natural gas in the United States. It operates through three segments: Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines. The company has a P/E ratio of 40.09.

The average volume for ONEOK Partners has been 724,700 shares per day over the past 30 days. ONEOK Partners has a market cap of $11.9 billion and is part of the energy industry. Shares are up 38.6% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates ONEOK Partners as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, attractive valuation levels, good cash flow from operations and growth in earnings per share. 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:
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • 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 74.1% when compared to the same quarter one year prior, rising from $145.59 million to $253.52 million.
  • Net operating cash flow has significantly increased by 308.88% to $266.25 million when compared to the same quarter last year. In addition, ONEOK PARTNERS -LP has also vastly surpassed the industry average cash flow growth rate of -49.64%.
  • ONEOK 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, ONEOK PARTNERS -LP reported lower earnings of $0.77 versus $2.34 in the prior year. This year, the market expects an improvement in earnings ($2.29 versus $0.77).

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