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."

FS Investment

Dividend Yield: 9.80%

FS Investment

(NYSE:

FSIC

) shares currently have a dividend yield of 9.80%.

FS Investment Corporation is a business development company specializing in investments in debt securities. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments. The company has a P/E ratio of 8.92.

The average volume for FS Investment has been 722,400 shares per day over the past 30 days. FS Investment has a market cap of $2.2 billion and is part of the financial services industry. Shares are down 7.2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

FS Investment

as a

hold

. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. 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:

  • The gross profit margin for FS INVESTMENT CORP is currently very high, coming in at 80.18%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -5.09% is in-line with the industry average.
  • When compared to other companies in the Capital Markets industry and the overall market, FS INVESTMENT CORP's return on equity is below that of both the industry average and the S&P 500.
  • FSIC, with its decline in revenue, slightly underperformed the industry average of 5.7%. Since the same quarter one year prior, revenues fell by 10.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 109.5% when compared to the same quarter one year ago, falling from $55.60 million to -$5.28 million.
  • Net operating cash flow has significantly decreased to -$151.80 million or 1496.60% 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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TransMontaigne Partners

Dividend Yield: 10.20%

TransMontaigne Partners

(NYSE:

TLP

) shares currently have a dividend yield of 10.20%.

TransMontaigne Partners L.P. operates as a terminaling and transportation company. The company has a P/E ratio of 14.70.

The average volume for TransMontaigne Partners has been 76,200 shares per day over the past 30 days. TransMontaigne Partners has a market cap of $422.0 million and is part of the energy industry. Shares are down 17.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

TransMontaigne Partners

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and generally higher debt management risk.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 36.8%. Since the same quarter one year prior, revenues slightly increased by 4.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 18.3% when compared to the same quarter one year prior, going from $6.52 million to $7.71 million.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, TRANSMONTAIGNE PARTNERS LP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • TLP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 29.71%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • TLP's debt-to-equity ratio of 0.65 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.50 is very low and demonstrates very weak liquidity.

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Costamare

Dividend Yield: 12.40%

Costamare

(NYSE:

CMRE

) shares currently have a dividend yield of 12.40%.

COSTAMARE INC. owns and charters containerships to liner companies worldwide. The company has a P/E ratio of 5.83.

The average volume for Costamare has been 218,900 shares per day over the past 30 days. Costamare has a market cap of $705.8 million and is part of the transportation industry. Shares are down 45.3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Costamare

as a

hold

. The company's strengths can be seen in multiple areas, such as its notable return on equity and expanding profit margins. 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 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 Marine industry and the overall market, COSTAMARE INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for COSTAMARE INC is currently very high, coming in at 72.84%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 28.07% significantly outperformed against the industry average.
  • Despite the weak revenue results, CMRE has outperformed against the industry average of 16.2%. Since the same quarter one year prior, revenues slightly dropped by 0.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Net operating cash flow has declined marginally to $59.35 million or 9.75% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Currently the debt-to-equity ratio of 1.72 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, CMRE has a quick ratio of 0.55, this demonstrates the lack of ability of the company to cover short-term liquidity needs.

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