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: 13.90%

Apollo Residential Mortgage

(NYSE:

AMTG

) shares currently have a dividend yield of 13.90%.

Apollo Residential Mortgage, Inc. primarily invests in residential mortgage assets in the United States. The company has a P/E ratio of 20.60.

The average volume for Apollo Residential Mortgage has been 225,800 shares per day over the past 30 days. Apollo Residential Mortgage has a market cap of $443.0 million and is part of the real estate industry. Shares are down 13.4% year-to-date as of the close of trading on Wednesday.

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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 9.7%. 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 on the basis of return on equity, APOLLO RESIDENTIAL MTG INC underperformed against that of the industry average and is significantly less than that of the S&P 500.

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CM Finance

Dividend Yield: 12.30%

CM Finance

(NASDAQ:

CMFN

) shares currently have a dividend yield of 12.30%.

CM Finance Inc. is a business development company. The company has a P/E ratio of 8.04.

The average volume for CM Finance has been 32,700 shares per day over the past 30 days. CM Finance has a market cap of $153.9 million and is part of the financial services industry. Shares are up 4.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

CM Finance

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive.

Highlights from the ratings report include:

  • CMFN's very impressive revenue growth greatly exceeded the industry average of 6.9%. Since the same quarter one year prior, revenues leaped by 50.5%. 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 improved to $3.67 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, CM FINANCE INC's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for CM FINANCE INC is currently very high, coming in at 72.10%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, CMFN's net profit margin of -22.93% 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 Capital Markets industry. The net income has significantly decreased by 133.5% when compared to the same quarter one year ago, falling from $5.70 million to -$1.91 million.

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BP Prudhoe Bay Royalty

Dividend Yield: 13.30%

BP Prudhoe Bay Royalty

(NYSE:

BPT

) shares currently have a dividend yield of 13.30%.

BP Prudhoe Bay Royalty Trust operates as a grantor trust in the United States. The company holds overriding royalty interest comprising a non-operational interest in minerals in the Prudhoe Bay oil field located on the North Slope of Alaska. The company has a P/E ratio of 16.74.

The average volume for BP Prudhoe Bay Royalty has been 174,300 shares per day over the past 30 days. BP Prudhoe Bay Royalty has a market cap of $949.1 million and is part of the energy industry. Shares are down 36.2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

BP Prudhoe Bay Royalty

as a

hold

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • BPT 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 2.67, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for BP PRUDHOE BAY ROYALTY TRUST is currently very high, coming in at 100.00%. BPT has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, BPT's net profit margin of 97.65% significantly outperformed against the industry.
  • BP PRUDHOE BAY ROYALTY TRUST has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, BP PRUDHOE BAY ROYALTY TRUST increased its bottom line by earning $10.60 versus $9.04 in the prior year.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 53.23%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 66.77% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 66.8% when compared to the same quarter one year ago, falling from $64.39 million to $21.38 million.

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