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."

CenterPoint Energy

Dividend Yield: 5.50%

CenterPoint Energy

(NYSE:

CNP

) shares currently have a dividend yield of 5.50%.

CenterPoint Energy, Inc. operates as a public utility holding company in the United States.

The average volume for CenterPoint Energy has been 4,901,700 shares per day over the past 30 days. CenterPoint Energy has a market cap of $7.8 billion and is part of the utilities industry. Shares are down 22.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

CenterPoint Energy

as a

hold

. The company's strongest point has been its expanding profit margins. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:

  • CNP, with its decline in revenue, slightly underperformed the industry average of 3.1%. Since the same quarter one year prior, revenues slightly dropped by 9.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • CENTERPOINT ENERGY 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 reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CENTERPOINT ENERGY INC increased its bottom line by earning $1.42 versus $0.72 in the prior year. For the next year, the market is expecting a contraction of 24.6% in earnings ($1.07 versus $1.42).
  • The share price of CENTERPOINT ENERGY INC has not done very well: it is down 23.03% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The debt-to-equity ratio is very high at 2.13 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, CNP has a quick ratio of 0.51, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • 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 Multi-Utilities industry and the overall market on the basis of return on equity, CENTERPOINT ENERGY INC underperformed against that of the industry average and is significantly less than that of the S&P 500.

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Medical Properties

Dividend Yield: 7.70%

Medical Properties

(NYSE:

MPW

) shares currently have a dividend yield of 7.70%.

Medical Properties Trust, Inc. operates as a real estate investment trust (REIT) in the United States. It acquires, develops, and invests in healthcare facilities; and leases healthcare facilities to healthcare operating companies and healthcare providers. The company has a P/E ratio of 24.89.

The average volume for Medical Properties has been 2,196,200 shares per day over the past 30 days. Medical Properties has a market cap of $2.7 billion and is part of the real estate industry. Shares are down 16.9% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Medical Properties

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 40.4%. 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 MEDICAL PROPERTIES TRUST is currently very high, coming in at 81.10%. Regardless of MPW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 20.04% trails the industry average.
  • Net operating cash flow has declined marginally to $44.74 million or 1.64% 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.
  • 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 greatly underperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income has decreased by 19.2% when compared to the same quarter one year ago, dropping from $28.54 million to $23.06 million.

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Macy's

Dividend Yield: 4.10%

Macy's

(NYSE:

M

) shares currently have a dividend yield of 4.10%.

Macy's, Inc., together with its subsidiaries, operates stores and Internet Websites in the United States. Its stores and Websites sell a range of merchandise, including apparel and accessories for men, women, and children; cosmetics; home furnishings; and other consumer goods. The company has a P/E ratio of 9.41.

The average volume for Macy's has been 7,907,400 shares per day over the past 30 days. Macy's has a market cap of $11.2 billion and is part of the retail industry. Shares are down 46% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Macy's

as a

hold

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

Highlights from the ratings report include:

  • 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. Compared to other companies in the Multiline Retail industry and the overall market, MACY'S INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 39.79% is the gross profit margin for MACY'S INC which we consider to be strong. 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 2.00% trails the industry average.
  • The debt-to-equity ratio is very high at 2.01 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.09, which clearly demonstrates the inability to cover short-term cash needs.
  • Net operating cash flow has significantly decreased to -$120.00 million or 191.60% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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