Income is a big part of investors' returns. Stocks, mutual funds and fixed income ideas in this column are featured because they are relatively solid in their ability to pay dividends or interest. We're giving income investors a resource to start their research for investments that give better yields with lower risk.

February 16, 2011 - StoneMor Partners L. P. (STON-NASDAQ) together with its subsidiaries, engages in the ownership and operation of cemeteries in the United States. The company operates in two segments, Cemetery Operations and Funeral Homes.

The Funeral Homes segment offers a range of funeral-related services, such as family consultation, the removal of and preparation of remains, and the use of funeral home facilities for visitation. StoneMor GP LLC serves as the general partner of the company. As of December 31, 2009, it operated 235 cemeteries in 24 states and in Puerto Rico, as well as owned and operated 63 funeral homes in 16 states, mostly on the east coast, and in Puerto Rico. The company was founded in 1999 and is based in Levittown, Pennsylvania.

One thing to note right away: Market Cap is only $460.13 million. That means it's small. Trades about 150,000 shares a day. It can move rather dramatically, up or down, if there's news of significance. While this can be a negative when the news is bad, it can work for investors when the news is good.

The yield is the other thing to note: it's 7.90%. This year, annual payment will be $2.30 a share, up from $2.23 last year. The dividend went up every year since 2005, a year after the partnership went public. It was $1.90 then. Financial Strength is C++ so that dividend isn't quite as strong as many income investors might like. Still, it's a good return on the investment in this low interest rate environment. Of course, with a higher yield comes higher risk.

The stock has been on a strong upward trajectory since early 2009 when it hit $9.50 a share (down from $28.70 in 2007). It's up over 200% since then, even with a loss of 5 cents a share in earnings for 2009. Investors most likely looked past the past and focused on the future. Estimates for 2010 (fiscal year ended in December) are for $1.64. For this year, the estimate is for 50 cents. Earnings are volatile here.

Two trends are working against the company in its current form. One is that the death rate is declining thanks to better health care and better access to it. The second is the decreasing trend in cremations, down from a peak in 2008. Management certainly knows of these trends and is adjusting its business model to counter them.

Essential numbers: Price to book is 2.89. Book value is $10.23. Price to sales is 2.48. Return on equity for the last 12 months was 15.50%. Return on assets was .61%. Operating margin was 5.13% and Profit margin was 11.24%. There's $17.96 million in cash for $1.15 a share. Total debt is $207.3 million. Debt to equity is 123%. Current ratio is 2.83. Beta is .91. In the last year, the stock is up 53.72%. There are 15.57 million shares outstanding with a Float of 13.08 million. Insiders own 18.91% of the stock (one director just sold over 1 million shares recently). Institutions have 6.20% of the stock.

If you have an above average tolerance for risk, then this stock, with its high yield, could be of interest. But because it's risen so high in a relatively short period of time, waiting to see if it takes a breather might be the prudent approach. Keep in mind, one great quarter has sometimes been followed by some severe losses. This stock is only for the adventurous looking for income.