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."

Apollo Residential Mortgage

Dividend Yield: 14.80%

Apollo Residential Mortgage

(NYSE:

AMTG

) shares currently have a dividend yield of 14.80%.

Apollo Residential Mortgage, Inc. primarily invests in residential mortgage assets in the United States. The company has a P/E ratio of 19.31.

The average volume for Apollo Residential Mortgage has been 237,600 shares per day over the past 30 days. Apollo Residential Mortgage has a market cap of $415.4 million and is part of the real estate industry. Shares are down 17.6% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Apollo Residential Mortgage

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.8%. Since the same quarter one year prior, revenues slightly increased by 9.2%. 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 RESIDENTIAL MTG INC is currently very high, coming in at 84.26%. Regardless of AMTG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AMTG's net profit margin of -24.10% significantly underperformed when compared to 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 122.8% when compared to the same quarter one year ago, falling from $44.00 million to -$10.03 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, APOLLO RESIDENTIAL MTG INC's return on equity significantly trails that of both the industry average and the S&P 500.

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Alcentra Capital

Dividend Yield: 11.60%

Alcentra Capital

(NASDAQ:

ABDC

) shares currently have a dividend yield of 11.60%.

Alcentra Capital Corporation is a Business Development Company specializing in investments in lower middle-market companies. It invests in the form of subordinated debt and, to a lesser extent, senior debt and minority equity investments. The company has a P/E ratio of 8.03.

The average volume for Alcentra Capital has been 55,400 shares per day over the past 30 days. Alcentra Capital has a market cap of $158.4 million and is part of the financial services industry. Shares are down 5.6% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Alcentra 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 find that the growth in the company's earnings per share has not been good.

Highlights from the ratings report include:

  • ABDC's revenue growth has slightly outpaced the industry average of 6.9%. Since the same quarter one year prior, revenues rose by 14.9%. 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 fallen to -$9.58 million from having none in the same quarter last year. Since the company had no net operating cash flow for the prior period, we cannot calculate a percent change in order to compare its growth rate with that of its industry average.
  • When compared to other companies in the Capital Markets industry and the overall market, ALCENTRA CAPITAL CORP's return on equity is below that of both the industry average and the S&P 500.
  • ALCENTRA CAPITAL CORP's earnings per share declined by 13.0% in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($1.50 versus $1.35).
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and the Capital Markets industry average. The net income has decreased by 11.8% when compared to the same quarter one year ago, dropping from $7.27 million to $6.41 million.

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TICC Capital

Dividend Yield: 16.90%

TICC Capital

(NASDAQ:

TICC

) shares currently have a dividend yield of 16.90%.

TICC Capital Corp., a business development company, operates as a closed-end, non-diversified management investment company. The firm invests in both public and private companies. The company has a P/E ratio of 10.22.

The average volume for TICC Capital has been 325,000 shares per day over the past 30 days. TICC Capital has a market cap of $410.9 million and is part of the financial services industry. Shares are down 9% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

TICC Capital

as a

hold

. The company's strengths can be seen in multiple areas, such as its 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 feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 218.27% to $42.55 million when compared to the same quarter last year. In addition, TICC CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of -422.49%.
  • The gross profit margin for TICC CAPITAL CORP is rather high; currently it is at 66.82%. Regardless of TICC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TICC's net profit margin of 42.20% significantly outperformed against the industry.
  • Compared to its price level of one year ago, TICC is down 20.96% to its most recent closing price of 6.98. Looking ahead, our view is that this company's fundamentals will not have much impact either way, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Capital Markets industry average. The net income has decreased by 23.6% when compared to the same quarter one year ago, dropping from $13.14 million to $10.04 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, TICC CAPITAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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