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."

Blueknight Energy Partners

Dividend Yield: 12.10%

Blueknight Energy Partners

(NASDAQ:

BKEP

) shares currently have a dividend yield of 12.10%.

Blueknight Energy Partners, L.P. provides integrated terminalling, storage, processing, gathering, and transportation services for companies engaged in the production, distribution, and marketing of crude oil and asphalt products in the United States.

The average volume for Blueknight Energy Partners has been 65,000 shares per day over the past 30 days. Blueknight Energy Partners has a market cap of $159.0 million and is part of the energy industry. Shares are down 15.8% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Blueknight Energy Partners

as a

hold

. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • Despite the weak revenue results, BKEP has outperformed against the industry average of 34.6%. Since the same quarter one year prior, revenues slightly dropped by 4.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 39.22% is the gross profit margin for BLUEKNIGHT ENERGY PRTNRS LP which we consider to be strong. Regardless of BKEP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BKEP's net profit margin of -38.42% significantly underperformed when compared to the industry average.
  • BLUEKNIGHT ENERGY PRTNRS LP 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, BLUEKNIGHT ENERGY PRTNRS LP swung to a loss, reporting -$0.50 versus $0.15 in the prior year. This year, the market expects an improvement in earnings ($0.10 versus -$0.50).
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 38.44%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 750.00% compared to the year-earlier quarter. 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.
  • 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 291.9% when compared to the same quarter one year ago, falling from $8.79 million to -$16.86 million.

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Apollo Investment

Dividend Yield: 14.40%

Apollo Investment

(NASDAQ:

AINV

) shares currently have a dividend yield of 14.40%.

Apollo Investment Corporation is business development company and operates as a closed-end management investment company. The company invests in middle market companies. It provides direct equity capital, mezzanine and senior secured loans, and subordinated debt and loans.

The average volume for Apollo Investment has been 1,520,900 shares per day over the past 30 days. Apollo Investment has a market cap of $1.3 billion and is part of the financial services industry. Shares are up 9% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Apollo Investment

as a

hold

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

Highlights from the ratings report include:

  • The gross profit margin for APOLLO INVESTMENT CORP is currently very high, coming in at 71.48%. 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 -27.32% is in-line with the industry average.
  • Net operating cash flow has increased to $55.91 million or 14.32% when compared to the same quarter last year. Despite an increase in cash flow of 14.32%, APOLLO INVESTMENT CORP is still growing at a significantly lower rate than the industry average of 143.97%.
  • AINV, with its decline in revenue, underperformed when compared the industry average of 1.8%. Since the same quarter one year prior, revenues fell by 14.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Looking at the price performance of AINV's shares over the past 12 months, there is not much good news to report: the stock is down 27.65%, 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. 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.
  • 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 Capital Markets industry and the overall market, APOLLO INVESTMENT CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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American Science & Engineering

Dividend Yield: 7.20%

American Science & Engineering

(NASDAQ:

ASEI

) shares currently have a dividend yield of 7.20%.

American Science and Engineering, Inc., together with its subsidiaries, develops, manufactures, markets, and sells X-ray inspection and other detection products for homeland security, force protection, public safety, and other defense and security applications in the US and internationally. The company has a P/E ratio of 553.80.

The average volume for American Science & Engineering has been 110,700 shares per day over the past 30 days. American Science & Engineering has a market cap of $198.5 million and is part of the electronics industry. Shares are down 32.5% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

American Science & Engineering

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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from the ratings report include:

  • ASEI 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 2.97, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for AMERICAN SCIENCE ENGINEERING is rather high; currently it is at 53.28%. 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 -2.09% is in-line with the industry average.
  • The revenue fell significantly faster than the industry average of 2.7%. Since the same quarter one year prior, revenues fell by 40.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • AMERICAN SCIENCE ENGINEERING 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, AMERICAN SCIENCE ENGINEERING reported lower earnings of $0.13 versus $1.92 in the prior year. For the next year, the market is expecting a contraction of 115.4% in earnings (-$0.02 versus $0.13).
  • 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 Aerospace & Defense industry. The net income has significantly decreased by 118.2% when compared to the same quarter one year ago, falling from $2.55 million to -$0.46 million.

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