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."

America First Multifamily Investors

Dividend Yield: 9.20%

America First Multifamily Investors

(NASDAQ:

ATAX

) shares currently have a dividend yield of 9.20%.

America First Multifamily Investors, L.P. acquires, holds, sells, and deals in a portfolio of mortgage revenue bonds that have been issued to provide construction and/or permanent financing for multifamily and student housing, and commercial properties. The company has a P/E ratio of 23.65.

The average volume for America First Multifamily Investors has been 109,100 shares per day over the past 30 days. America First Multifamily Investors has a market cap of $327.8 million and is part of the real estate industry. Shares are up 4.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

America First Multifamily Investors

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income and expanding profit margins. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • ATAX's very impressive revenue growth greatly exceeded the industry average of 14.6%. Since the same quarter one year prior, revenues leaped by 63.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for AMERICA FIRST MULTIFAMILY-LP is currently very high, coming in at 86.71%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 48.02% significantly outperformed against the industry average.
  • AMERICA FIRST MULTIFAMILY-LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AMERICA FIRST MULTIFAMILY-LP reported lower earnings of $0.25 versus $0.34 in the prior year. This year, the market expects an improvement in earnings ($0.36 versus $0.25).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Thrifts & Mortgage Finance industry and the overall market, AMERICA FIRST MULTIFAMILY-LP's return on equity is below that of both the industry average and the S&P 500.
  • ATAX has underperformed the S&P 500 Index, declining 7.74% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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CSP

Dividend Yield: 7.40%

CSP

(NASDAQ:

CSPI

) shares currently have a dividend yield of 7.40%.

CSP Inc., together with its subsidiaries, develops and markets information technology (IT) integration solutions and high-performance cluster computer systems to industrial, commercial, and defense customers in the Americas, Europe, and Asia.

The average volume for CSP has been 4,800 shares per day over the past 30 days. CSP has a market cap of $21.9 million and is part of the computer software & services industry. Shares are down 21.6% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

TheStreet Recommends

CSP

as a

hold

. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

  • CSPI 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. To add to this, CSPI has a quick ratio of 1.69, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Despite the weak revenue results, CSPI has outperformed against the industry average of 27.1%. Since the same quarter one year prior, revenues slightly dropped by 1.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • CSP INC 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, CSP INC increased its bottom line by earning $0.38 versus $0.10 in the prior year.
  • The gross profit margin for CSP INC is rather low; currently it is at 24.31%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.11% significantly trails the industry average.
  • Net operating cash flow has decreased to $2.18 million or 49.01% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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Fifth Street Finance Corporation

Dividend Yield: 11.80%

Fifth Street Finance Corporation

(NASDAQ:

FSC

) shares currently have a dividend yield of 11.80%.

Fifth Street Finance Corp. The company has a P/E ratio of 7.61.

The average volume for Fifth Street Finance Corporation has been 1,054,800 shares per day over the past 30 days. Fifth Street Finance Corporation has a market cap of $933.8 million and is part of the financial services industry. Shares are down 24% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Fifth Street Finance Corporation

as a

hold

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

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Capital Markets industry average. The net income increased by 0.8% when compared to the same quarter one year prior, going from $20.29 million to $20.45 million.
  • The gross profit margin for FIFTH STREET FINANCE CORP is rather high; currently it is at 66.50%. Regardless of FSC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FSC's net profit margin of 29.13% significantly outperformed against the industry.
  • Net operating cash flow has significantly increased by 176.55% to $296.65 million when compared to the same quarter last year. Despite an increase in cash flow of 176.55%, FIFTH STREET FINANCE CORP is still growing at a significantly lower rate than the industry average of 230.25%.
  • Looking at the price performance of FSC's shares over the past 12 months, there is not much good news to report: the stock is down 31.50%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • 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. When compared to other companies in the Capital Markets industry and the overall market, FIFTH STREET FINANCE CORP's return on equity is below that of both the industry average and the S&P 500.

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