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."

BG Staffing

Dividend Yield: 8.30%

BG Staffing

(AMEX:

BGSF

) shares currently have a dividend yield of 8.30%.

BG Staffing, Inc. operates as a temporary staffing company in the United States. It operates through three segments: Light Industrial, Multifamily, and IT Staffing. The company has a P/E ratio of 31.58.

The average volume for BG Staffing has been 1,400 shares per day over the past 30 days. BG Staffing has a market cap of $88.7 million and is part of the diversified services industry. Shares are down 7.7% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

BG Staffing

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 4.7%. Since the same quarter one year prior, revenues rose by 16.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • BG STAFFING INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago.
  • When compared to other companies in the Professional Services industry and the overall market, BG STAFFING INC's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for BG STAFFING INC is rather low; currently it is at 21.83%. Regardless of BGSF'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 2.93% trails the industry average.
  • The debt-to-equity ratio of 1.11 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, BGSF's quick ratio is somewhat strong at 1.39, demonstrating the ability to handle short-term liquidity needs.

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AmeriGas Partners

Dividend Yield: 8.50%

AmeriGas Partners

(NYSE:

APU

) shares currently have a dividend yield of 8.50%.

AmeriGas Partners, L.P. operates as a retail and wholesale distributor of propane gas, and related equipment and supplies in the United States. The company has a P/E ratio of 18.76.

The average volume for AmeriGas Partners has been 189,300 shares per day over the past 30 days. AmeriGas Partners has a market cap of $4.0 billion and is part of the utilities industry. Shares are down 9.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

TheStreet Recommends

AmeriGas Partners

as a

hold

. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing 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 Gas Utilities industry. The net income increased by 32.3% when compared to the same quarter one year prior, rising from -$37.76 million to -$25.58 million.
  • The gross profit margin for AMERIGAS PARTNERS -LP is rather high; currently it is at 58.63%. It has increased significantly from the same period last year.
  • APU, with its decline in revenue, slightly underperformed the industry average of 19.5%. Since the same quarter one year prior, revenues fell by 22.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Currently the debt-to-equity ratio of 1.78 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, APU has a quick ratio of 0.55, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has decreased to $129.08 million or 34.10% 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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Ares Commercial Real Estate

Dividend Yield: 8.10%

Ares Commercial Real Estate

(NYSE:

ACRE

) shares currently have a dividend yield of 8.10%.

Ares Commercial Real Estate Corporation operates as a specialty finance company. The company operates in two segments, Principal Lending and Mortgage Banking. The company has a P/E ratio of 12.18.

The average volume for Ares Commercial Real Estate has been 226,500 shares per day over the past 30 days. Ares Commercial Real Estate has a market cap of $351.9 million and is part of the real estate industry. Shares are up 7.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Ares Commercial Real Estate

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:

  • ACRE's revenue growth has slightly outpaced the industry average of 9.7%. Since the same quarter one year prior, revenues rose by 19.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ARES COMMERCIAL REAL ESTATE has improved earnings per share by 34.8% 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ARES COMMERCIAL REAL ESTATE increased its bottom line by earning $0.85 versus $0.73 in the prior year. This year, the market expects an improvement in earnings ($1.15 versus $0.85).
  • The gross profit margin for ARES COMMERCIAL REAL ESTATE is rather high; currently it is at 67.22%. 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 29.08% trails the industry average.
  • After a year of stock price fluctuations, the net result is that ACRE'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. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, ARES COMMERCIAL REAL ESTATE's return on equity is below that of both the industry average and the S&P 500.

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