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 "Hold."

Alliance Holdings GP

Dividend Yield: 10.30%

Alliance Holdings GP

(NASDAQ:

AHGP

) shares currently have a dividend yield of 10.30%.

Alliance Holdings GP, L.P. and subsidiaries, produces and markets coal primarily to utilities and industrial users in the United States. The company engages in the production of a range of steam coal with varying sulfur and heat contents. The company has a P/E ratio of 6.29.

The average volume for Alliance Holdings GP has been 136,600 shares per day over the past 30 days. Alliance Holdings GP has a market cap of $1.3 billion and is part of the metals & mining industry. Shares are up 6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Alliance Holdings GP

as a

hold

. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:

  • 37.04% is the gross profit margin for ALLIANCE HOLDINGS GP LP which we consider to be strong. Regardless of AHGP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AHGP's net profit margin of 7.47% compares favorably to the industry average.
  • AHGP, with its decline in revenue, slightly underperformed the industry average of 24.1%. Since the same quarter one year prior, revenues fell by 26.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Currently the debt-to-equity ratio of 1.86 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.39, which clearly demonstrates the inability to cover short-term cash needs.
  • Net operating cash flow has significantly decreased to $80.28 million or 50.15% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, ALLIANCE HOLDINGS GP LP has marginally lower results.

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Ferrellgas Partners

Dividend Yield: 11.30%

Ferrellgas Partners

(NYSE:

FGP

) shares currently have a dividend yield of 11.30%.

Ferrellgas Partners, L.P. distributes and sells propane and related equipment and supplies primarily in the United States. The company transports propane to propane distribution locations, tanks on customers' premises, or to portable propane tanks delivered to retailers.

The average volume for Ferrellgas Partners has been 328,400 shares per day over the past 30 days. Ferrellgas Partners has a market cap of $1.8 billion and is part of the energy industry. Shares are up 9.8% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

TheStreet Recommends

Ferrellgas Partners

as a

hold

. Among the primary strengths of the company is its respectable return on equity which we feel is likely to continue. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk.

Highlights from the ratings report include:

  • Compared to other companies in the Gas Utilities industry and the overall market, FERRELLGAS PARTNERS -LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite the weak revenue results, FGP has outperformed against the industry average of 19.9%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for FERRELLGAS PARTNERS -LP is currently lower than what is desirable, coming in at 25.30%. Regardless of FGP'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 3.66% trails the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Gas Utilities industry. The net income has significantly decreased by 47.8% when compared to the same quarter one year ago, falling from $35.81 million to $18.69 million.
  • The debt-to-equity ratio is very high at 39.97 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, FGP has a quick ratio of 0.64, this demonstrates the lack of ability of the company to cover short-term liquidity needs.

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Gladstone Capital

Dividend Yield: 11.40%

Gladstone Capital

(NASDAQ:

GLAD

) shares currently have a dividend yield of 11.40%.

Gladstone Capital Corporation is a business development company specializing in investments in debt and equity securities. The company has a P/E ratio of 13.96.

The average volume for Gladstone Capital has been 85,900 shares per day over the past 30 days. Gladstone Capital has a market cap of $173.1 million and is part of the financial services industry. Shares are up 1.2% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Gladstone Capital

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 23.7%. Since the same quarter one year prior, revenues slightly increased by 2.5%. 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 90.50% to -$2.60 million when compared to the same quarter last year. In addition, GLADSTONE CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of -199.13%.
  • The gross profit margin for GLADSTONE CAPITAL CORP is currently very high, coming in at 72.46%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -64.91% is in-line with the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Capital Markets industry. The net income has significantly decreased by 164.3% when compared to the same quarter one year ago, falling from $9.54 million to -$6.14 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Capital Markets industry and the overall market, GLADSTONE CAPITAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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