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."

CenterPoint Energy

Dividend Yield: 4.30%

CenterPoint Energy (NYSE: CNP) shares currently have a dividend yield of 4.30%.

CenterPoint Energy, Inc. operates as a public utility holding company in the United States. The company has a P/E ratio of 14.31.

The average volume for CenterPoint Energy has been 3,956,500 shares per day over the past 30 days. CenterPoint Energy has a market cap of $10.3 billion and is part of the utilities industry. Shares are up 29.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates CenterPoint Energy as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income 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:
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Multi-Utilities industry average. The net income increased by 17.6% when compared to the same quarter one year prior, going from $131.00 million to $154.00 million.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 30.39% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CNP should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • CENTERPOINT ENERGY INC has improved earnings per share by 20.0% 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, CENTERPOINT ENERGY INC swung to a loss, reporting -$1.61 versus $1.42 in the prior year. This year, the market expects an improvement in earnings ($1.16 versus -$1.61).
  • CNP, with its decline in revenue, slightly underperformed the industry average of 9.3%. Since the same quarter one year prior, revenues fell by 18.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for CENTERPOINT ENERGY INC is currently lower than what is desirable, coming in at 25.71%. Regardless of CNP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.76% trails the industry average.

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Host Hotels & Resorts

Dividend Yield: 4.70%

Host Hotels & Resorts (NYSE: HST) shares currently have a dividend yield of 4.70%.

Host Hotels & Resorts, Inc. is a publicly owned real estate investment trust (REIT). The firm primarily engages in the ownership and operation of hotel properties. It invests in the real estate markets of United States. The company has a P/E ratio of 20.16.

The average volume for Host Hotels & Resorts has been 10,053,000 shares per day over the past 30 days. Host Hotels & Resorts has a market cap of $12.8 billion and is part of the real estate industry. Shares are up 12.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Host Hotels & Resorts as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, reasonable valuation levels, good cash flow from operations and growth in earnings per share. We feel its strengths outweigh the fact that the company shows low profit margins.

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 Real Estate Investment Trusts (REITs) industry. The net income increased by 85.7% when compared to the same quarter one year prior, rising from $98.00 million to $182.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.1%. Since the same quarter one year prior, revenues slightly increased by 2.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $219.00 million or 26.58% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 9.08%.
  • HOST HOTELS & RESORTS INC 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, HOST HOTELS & RESORTS INC reported lower earnings of $0.74 versus $0.97 in the prior year. This year, the market expects an improvement in earnings ($0.98 versus $0.74).

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Magellan Midstream Partners

Dividend Yield: 4.60%

Magellan Midstream Partners (NYSE: MMP) shares currently have a dividend yield of 4.60%.

Magellan Midstream Partners, L.P. engages in the transportation, storage, and distribution of refined petroleum products and crude oil in the United States. It operates through Refined Products, Crude Oil, and Marine Storage segments. The company has a P/E ratio of 41.38.

The average volume for Magellan Midstream Partners has been 771,500 shares per day over the past 30 days. Magellan Midstream Partners has a market cap of $16.3 billion and is part of the energy industry. Shares are up 6.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Magellan Midstream Partners 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, solid stock price performance 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 net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 12.8% when compared to the same quarter one year prior, going from $183.64 million to $207.07 million.
  • The gross profit margin for MAGELLAN MIDSTREAM PRTNRS LP is rather high; currently it is at 54.44%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 39.83% significantly outperformed against the industry average.
  • Net operating cash flow has slightly increased to $209.57 million or 9.67% when compared to the same quarter last year. In addition, MAGELLAN MIDSTREAM PRTNRS LP has also vastly surpassed the industry average cash flow growth rate of -49.98%.
  • After a year of stock price fluctuations, the net result is that MMP's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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.
  • Despite the weak revenue results, MMP has outperformed against the industry average of 24.0%. Since the same quarter one year prior, revenues slightly dropped by 2.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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