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."

Greenhill

Dividend Yield: 8.30%

Greenhill

(NYSE:

GHL

) shares currently have a dividend yield of 8.30%.

Greenhill & Co., Inc., together with its subsidiaries, operates as an independent investment bank for corporations, partnerships, institutions, and governments worldwide. The company has a P/E ratio of 26.43.

The average volume for Greenhill has been 542,600 shares per day over the past 30 days. Greenhill has a market cap of $644.8 million and is part of the financial services industry. Shares are down 25.3% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Greenhill

as a

hold

. Among the primary strengths of the company is its generally strong cash flow from operations. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • Net operating cash flow has slightly increased to $41.15 million or 1.78% when compared to the same quarter last year. Despite an increase in cash flow of 1.78%, GREENHILL & CO INC is still growing at a significantly lower rate than the industry average of 149.14%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 1.9%. Since the same quarter one year prior, revenues slightly dropped by 1.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • GREENHILL & CO 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, GREENHILL & CO INC reported lower earnings of $0.82 versus $1.45 in the prior year. This year, the market expects an improvement in earnings ($1.54 versus $0.82).
  • The gross profit margin for GREENHILL & CO INC is rather low; currently it is at 21.48%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 10.42% trails that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.51%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 50.98% compared to the year-earlier 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, GHL is still more expensive than most of the other companies in its industry.

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Spirit Realty Capital

Dividend Yield: 6.30%

Spirit Realty Capital

(NYSE:

SRC

) shares currently have a dividend yield of 6.30%.

Spirit Realty Capital, Inc is a publicly traded real estate investment trust. The company has a P/E ratio of 42.42.

The average volume for Spirit Realty Capital has been 5,642,500 shares per day over the past 30 days. Spirit Realty Capital has a market cap of $4.9 billion and is part of the real estate industry. Shares are up 10.8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Spirit Realty Capital

as a

hold

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

Highlights from the ratings report include:

  • SRC's revenue growth has slightly outpaced the industry average of 7.9%. Since the same quarter one year prior, revenues slightly increased by 9.0%. 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 significantly increased by 57.80% to $100.77 million when compared to the same quarter last year. In addition, SPIRIT REALTY CAPITAL INC has also vastly surpassed the industry average cash flow growth rate of 3.63%.
  • SPIRIT REALTY CAPITAL 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SPIRIT REALTY CAPITAL INC turned its bottom line around by earning $0.27 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($0.29 versus $0.27).
  • The share price of SPIRIT REALTY CAPITAL INC has not done very well: it is down 6.42% 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 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 66.7% when compared to the same quarter one year ago, falling from $34.11 million to $11.35 million.

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Domtar

Dividend Yield: 4.30%

Domtar

(NYSE:

UFS

) shares currently have a dividend yield of 4.30%.

Domtar Corporation designs, manufactures, markets, and distributes communications papers, specialty and packaging papers, and absorbent hygiene products in the United States, Canada, Europe, Asia, and internationally. It operates through two segments, Pulp and Paper, and Personal Care. The company has a P/E ratio of 16.84.

The average volume for Domtar has been 602,400 shares per day over the past 30 days. Domtar has a market cap of $2.3 billion and is part of the consumer non-durables industry. Shares are up 3.7% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Domtar

as a

hold

. The company's strengths can be seen in multiple areas, such as its attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. 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 current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.97 is somewhat weak and could be cause for future problems.
  • UFS, with its decline in revenue, slightly underperformed the industry average of 2.6%. Since the same quarter one year prior, revenues slightly dropped by 4.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Net operating cash flow has decreased to $137.00 million or 26.34% 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.
  • 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. When compared to other companies in the Paper & Forest Products industry and the overall market, DOMTAR CORP's return on equity is below that of both the industry average and the S&P 500.

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