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: 7.80%

Franklin Street Properties

(AMEX:

FSP

) shares currently have a dividend yield of 7.80%.

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 27.74.

The average volume for Franklin Street Properties has been 383,500 shares per day over the past 30 days. Franklin Street Properties has a market cap of $972.8 million and is part of the real estate industry. Shares are down 3.8% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Franklin Street Properties

as a

hold

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including poor profit margins 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 Real Estate Investment Trusts (REITs) industry. The net income increased by 258.8% when compared to the same quarter one year prior, rising from $4.30 million to $15.41 million.
  • FSP, with its decline in revenue, underperformed when compared the industry average of 7.9%. Since the same quarter one year prior, revenues slightly dropped by 2.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • FSP has underperformed the S&P 500 Index, declining 20.87% from its price level of one year ago. 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 gross profit margin for FRANKLIN STREET PROPERTIES is rather low; currently it is at 21.07%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 25.49% trails that of the industry average.

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Textainer Group Holdings

Dividend Yield: 7.70%

Textainer Group Holdings

(NYSE:

TGH

) shares currently have a dividend yield of 7.70%.

Textainer Group Holdings Limited, together with its subsidiaries, engages in the purchase, ownership, management, leasing, and disposal of a fleet of intermodal containers worldwide. It operates through three segments: Container Ownership, Container Management, and Container Resale. The company has a P/E ratio of 6.58.

The average volume for Textainer Group Holdings has been 458,500 shares per day over the past 30 days. Textainer Group Holdings has a market cap of $713.3 million and is part of the diversified services industry. Shares are down 8.9% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Textainer Group Holdings

as a

hold

. The company's strengths can be seen in multiple areas, such as its attractive valuation levels and expanding profit margins. 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 gross profit margin for TEXTAINER GROUP HOLDINGS LTD is currently very high, coming in at 86.40%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 16.57% is above that of the industry average.
  • TGH, with its decline in revenue, slightly underperformed the industry average of 4.6%. Since the same quarter one year prior, revenues slightly dropped by 10.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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. In comparison to the other companies in the Trading Companies & Distributors industry and the overall market, TEXTAINER GROUP HOLDINGS LTD's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has decreased to $92.32 million or 11.45% 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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Fidus Investment

Dividend Yield: 10.80%

Fidus Investment

(NASDAQ:

FDUS

) shares currently have a dividend yield of 10.80%.

Fidus Investment Corporation operates as an externally managed, closed-end, and non-diversified management investment company. The company provides customized debt and equity financing solutions to lower middle-market companies in the United States. The company has a P/E ratio of 6.49.

The average volume for Fidus Investment has been 56,100 shares per day over the past 30 days. Fidus Investment has a market cap of $234.7 million and is part of the financial services industry. Shares are up 5.2% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Fidus Investment

as a

hold

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

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 4.5%. Since the same quarter one year prior, revenues rose by 19.7%. 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 FIDUS INVESTMENT CORP is rather high; currently it is at 69.72%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 40.47% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 82.55% to -$4.98 million when compared to the same quarter last year. Despite an increase in cash flow of 82.55%, FIDUS INVESTMENT CORP is still growing at a significantly lower rate than the industry average of 139.02%.
  • FIDUS INVESTMENT CORP's earnings per share declined by 10.5% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, FIDUS INVESTMENT CORP reported lower earnings of $1.34 versus $2.01 in the prior year. This year, the market expects an improvement in earnings ($1.70 versus $1.34).
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, FDUS has underperformed the S&P 500 Index, declining 10.95% from its price level of one year ago. 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.

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