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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."

Franklin Street Properties

Dividend Yield: 8.00%

Franklin Street Properties

(AMEX:

FSP

) shares currently have a dividend yield of 8.00%.

Franklin Street Properties Corp. is a publicly traded hybrid real estate investment trust. The firm invests in the real estate markets of the United States. It primarily engages in property acquisitions and dispositions, short-term financing, leasing, development and asset management. The company has a P/E ratio of 39.50.

The average volume for Franklin Street Properties has been 343,800 shares per day over the past 30 days. Franklin Street Properties has a market cap of $949.8 million and is part of the real estate industry. Shares are down 9.2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Franklin Street Properties

TheStreet Recommends

as a

hold

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and poor profit margins.

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 Real Estate Investment Trusts (REITs) industry. The net income increased by 102.0% when compared to the same quarter one year prior, rising from $1.57 million to $3.17 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.3%. Since the same quarter one year prior, revenues slightly increased by 1.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FRANKLIN STREET PROPERTIES 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, FRANKLIN STREET PROPERTIES reported lower earnings of $0.14 versus $0.18 in the prior year. This year, the market expects an improvement in earnings ($0.38 versus $0.14).
  • Net operating cash flow has decreased to $26.94 million or 17.89% 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.
  • FSP'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 27.51%, 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. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, FSP is still more expensive than most of the other companies in its industry.

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Air Industries Group

Dividend Yield: 9.00%

Air Industries Group

(AMEX:

AIRI

) shares currently have a dividend yield of 9.00%.

Air Industries Group, an aerospace and defense company, designs and manufactures structural parts and assemblies that focus on flight safety. The company operates through Complex Machining, Aero structures and Electronics, and Turbine Engine Components segments.

The average volume for Air Industries Group has been 4,300 shares per day over the past 30 days. Air Industries Group has a market cap of $50.7 million and is part of the aerospace/defense industry. Shares are down 18% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Air Industries Group

as a

hold

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

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 4.5%. Since the same quarter one year prior, revenues rose by 39.1%. 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.
  • Net operating cash flow has increased to -$1.23 million or 47.10% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 8.16%.
  • Looking at the price performance of AIRI's shares over the past 12 months, there is not much good news to report: the stock is down 29.27%, 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. 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.
  • AIR INDUSTRIES GROUP INC's earnings per share declined by 20.0% in the most recent quarter compared to 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, AIR INDUSTRIES GROUP INC reported lower earnings of $0.11 versus $0.64 in the prior year. For the next year, the market is expecting a contraction of 81.8% in earnings ($0.02 versus $0.11).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Aerospace & Defense industry average, but is greater than that of the S&P 500. The net income has decreased by 11.3% when compared to the same quarter one year ago, dropping from $0.38 million to $0.34 million.

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Compass Diversified Holdings

Dividend Yield: 9.50%

Compass Diversified Holdings

(NYSE:

CODI

) shares currently have a dividend yield of 9.50%.

Compass Diversified Holdings is a private equity firm specializing in acquisitions, buyouts, and middle market investments. It seeks to invest in manufacturing, distribution, consumer products, and business services sectors. The firm prefers to invest in companies based in North America. The company has a P/E ratio of 63.42.

The average volume for Compass Diversified Holdings has been 128,400 shares per day over the past 30 days. Compass Diversified Holdings has a market cap of $826.4 million and is part of the conglomerates industry. Shares are down 5.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Compass Diversified Holdings

as a

hold

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

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 15.2%. Since the same quarter one year prior, revenues rose by 47.3%. 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.
  • Despite currently having a low debt-to-equity ratio of 0.37, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that CODI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.58 is high and demonstrates strong liquidity.
  • 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 Diversified Financial Services industry. The net income has significantly decreased by 37.0% when compared to the same quarter one year ago, falling from $261.10 million to $164.41 million.
  • 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 Diversified Financial Services industry and the overall market on the basis of return on equity, COMPASS DIVERSIFIED HOLDINGS underperformed against that of the industry average and is significantly less than that of the S&P 500.

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