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."

Guess

Dividend Yield: 5.00%

Guess

(NYSE:

GES

) shares currently have a dividend yield of 5.00%.

Guess , Inc. designs, markets, distributes, and licenses lifestyle collections of contemporary apparel and accessories for men, women, and children that reflect the American lifestyle and European fashion sensibilities. The company has a P/E ratio of 15.90.

The average volume for Guess has been 1,184,000 shares per day over the past 30 days. Guess has a market cap of $1.5 billion and is part of the retail industry. Shares are down 11.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Guess

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, reasonable valuation levels 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:

  • GES's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, GES has a quick ratio of 2.10, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 36.65% is the gross profit margin for GUESS 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 3.51% trails the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Specialty Retail industry average, but is greater than that of the S&P 500. The net income has decreased by 16.7% when compared to the same quarter one year ago, dropping from $21.95 million to $18.29 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Specialty Retail industry and the overall market, GUESS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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DDR

Dividend Yield: 4.10%

DDR

(NYSE:

DDR

) shares currently have a dividend yield of 4.10%.

DDR Corp. is an equity real estate investment trust. It invests in the real estate markets of the United States and Puerto Rico. The firm is in the business of acquiring, owning, developing, redeveloping, expanding, leasing and managing shopping centers.

The average volume for DDR has been 3,999,400 shares per day over the past 30 days. DDR has a market cap of $6.1 billion and is part of the real estate industry. Shares are down 6.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

DDR

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and growth in earnings per share. 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:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 5.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 35.49% is the gross profit margin for DDR CORP 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 22.46% trails the industry average.
  • DDR CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, DDR CORP continued to lose money by earning -$0.01 versus -$0.05 in the prior year. For the next year, the market is expecting a contraction of 4500.0% in earnings (-$0.46 versus -$0.01).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Real Estate Investment Trusts (REITs) industry average, but is greater than that of the S&P 500. The net income has decreased by 13.2% when compared to the same quarter one year ago, dropping from $68.61 million to $59.56 million.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, DDR CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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Questar

Dividend Yield: 4.50%

Questar

(NYSE:

STR

) shares currently have a dividend yield of 4.50%.

Questar Corporation operates as an integrated natural gas company in the United States. The company has a P/E ratio of 15.01.

The average volume for Questar has been 1,656,000 shares per day over the past 30 days. Questar has a market cap of $3.3 billion and is part of the utilities industry. Shares are down 25.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Questar

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 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 gross profit margin for QUESTAR CORP is currently very high, coming in at 100.91%. It has increased significantly from the same period last year.
  • QUESTAR CORP's earnings per share declined by 18.2% 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, QUESTAR CORP increased its bottom line by earning $1.28 versus $0.91 in the prior year. This year, the market expects an improvement in earnings ($1.29 versus $1.28).
  • Despite the weak revenue results, STR has outperformed against the industry average of 27.4%. Since the same quarter one year prior, revenues slightly dropped by 9.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Net operating cash flow has decreased to $62.80 million or 20.20% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The debt-to-equity ratio of 1.23 is relatively high when compared with the industry average, suggesting a need for better debt level management. 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.

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