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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."

Apollo Commercial Real Estate Finance

Dividend Yield: 10.40%

Apollo Commercial Real Estate Finance

(NYSE:

ARI

) shares currently have a dividend yield of 10.40%.

Apollo Commercial Real Estate Finance, Inc. The company has a P/E ratio of 9.44.

The average volume for Apollo Commercial Real Estate Finance has been 403,900 shares per day over the past 30 days. Apollo Commercial Real Estate Finance has a market cap of $992.7 million and is part of the real estate industry. Shares are up 4.8% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Apollo Commercial Real Estate Finance

TheStreet Recommends

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, expanding profit margins, good cash flow from operations and increase in stock price during the past year. 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:

  • ARI's very impressive revenue growth greatly exceeded the industry average of 9.8%. Since the same quarter one year prior, revenues leaped by 55.4%. 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.
  • The gross profit margin for APOLLO COMMERCIAL RE FIN INC is currently very high, coming in at 86.82%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 54.64% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $23.08 million or 46.80% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 12.34%.
  • After a year of stock price fluctuations, the net result is that ARI'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.

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Highway Holdings

Dividend Yield: 10.30%

Highway Holdings

(NASDAQ:

HIHO

) shares currently have a dividend yield of 10.30%.

Highway Holdings Limited, through its subsidiaries, manufactures and sells metal, plastic, electric, and electronic components, subassemblies, and finished products for original equipment manufacturers (OEM) and contract manufacturers. The company has a P/E ratio of 24.38.

The average volume for Highway Holdings has been 19,400 shares per day over the past 30 days. Highway Holdings has a market cap of $14.8 million and is part of the industrial industry. Shares are up 39.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Highway Holdings

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, growth in earnings per share and compelling growth in net income. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 15.3%. Since the same quarter one year prior, revenues slightly increased by 5.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HIHO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.98, which clearly demonstrates the ability to cover short-term cash needs.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.
  • HIGHWAY HOLDINGS LTD has improved earnings per share by 14.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, HIGHWAY HOLDINGS LTD increased its bottom line by earning $0.31 versus $0.16 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 18.0% when compared to the same quarter one year prior, going from $0.26 million to $0.30 million.

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Rose Rock Midstream

Dividend Yield: 7.40%

Rose Rock Midstream

(NYSE:

RRMS

) shares currently have a dividend yield of 7.40%.

Rose Rock Midstream, L.P. owns, operates, develops, and acquires a portfolio of midstream energy assets. The company gathers, transports, stores, distributes, and markets crude oil in Colorado, Kansas, Louisiana, Montana, New Mexico, North Dakota, Ohio, Oklahoma, Texas, and Wyoming. The company has a P/E ratio of 24.26.

The average volume for Rose Rock Midstream has been 121,200 shares per day over the past 30 days. Rose Rock Midstream has a market cap of $1.3 billion and is part of the energy industry. Shares are down 23.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Rose Rock Midstream

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, reasonable valuation levels and good cash flow from operations. 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 55.1% when compared to the same quarter one year prior, rising from $11.01 million to $17.07 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, ROSE ROCK MIDSTREAM LP's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 375.23% to $26.94 million when compared to the same quarter last year. In addition, ROSE ROCK MIDSTREAM LP has also vastly surpassed the industry average cash flow growth rate of -20.65%.
  • Despite the weak revenue results, RRMS has outperformed against the industry average of 34.4%. Since the same quarter one year prior, revenues fell by 23.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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