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."

Hudson Global

Dividend Yield: 9.50%

Hudson Global

(NASDAQ:

HSON

) shares currently have a dividend yield of 9.50%.

Hudson Global, Inc. provides professional-level recruitment and related talent solutions for small to large-sized corporations and government agencies worldwide. The company has a P/E ratio of 14.80.

The average volume for Hudson Global has been 37,500 shares per day over the past 30 days. Hudson Global has a market cap of $71.9 million and is part of the diversified services industry. Shares are down 27.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Hudson Global

as a

hold

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good.

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 Professional Services industry. The net income increased by 49.0% when compared to the same quarter one year prior, rising from -$6.84 million to -$3.49 million.
  • HSON's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, HSON has a quick ratio of 1.79, which demonstrates the ability of the company to cover short-term liquidity needs.
  • After a year of stock price fluctuations, the net result is that HSON's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • HSON, with its decline in revenue, underperformed when compared the industry average of 4.8%. Since the same quarter one year prior, revenues fell by 18.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Professional Services industry and the overall market, HUDSON GLOBAL INC's return on equity is below that of both the industry average and the S&P 500.

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Apollo Investment

Dividend Yield: 14.20%

Apollo Investment

(NASDAQ:

AINV

) shares currently have a dividend yield of 14.20%.

Apollo Investment Corporation is business development company and operates as a closed-end management investment company. The company invests in middle market companies. It provides direct equity capital, mezzanine and senior secured loans, and subordinated debt and loans.

The average volume for Apollo Investment has been 1,019,300 shares per day over the past 30 days. Apollo Investment has a market cap of $1.3 billion and is part of the financial services industry. Shares are up 8.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Apollo Investment

as a

hold

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

Highlights from the ratings report include:

  • Net operating cash flow has slightly increased to $120.73 million or 6.36% when compared to the same quarter last year. In addition, APOLLO INVESTMENT CORP has also vastly surpassed the industry average cash flow growth rate of -200.02%.
  • The gross profit margin for APOLLO INVESTMENT CORP is currently very high, coming in at 72.58%. 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 -27.41% is in-line with the industry average.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 24.4%. Since the same quarter one year prior, revenues fell by 16.4%. The declining revenue appears to have seeped down to the company's 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 99.5% when compared to the same quarter one year ago, falling from -$11.73 million to -$23.40 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 Capital Markets industry and the overall market, APOLLO INVESTMENT CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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Pennant Park Investment

Dividend Yield: 16.70%

Pennant Park Investment

(NASDAQ:

PNNT

) shares currently have a dividend yield of 16.70%.

PennantPark Investment Corporation is a business development firm specializing in direct and mezzanine investments in middle market companies. It invests in the form of mezzanine debt, senior secured loans, and equity investments. The company has a P/E ratio of 3.92.

The average volume for Pennant Park Investment has been 344,500 shares per day over the past 30 days. Pennant Park Investment has a market cap of $477.5 million and is part of the financial services industry. Shares are up 5.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Pennant Park Investment

as a

hold

. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • The gross profit margin for PENNANTPARK INVESTMENT CORP is currently very high, coming in at 71.02%. 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 10.09% trails the industry average.
  • Despite the weak revenue results, PNNT has outperformed against the industry average of 24.4%. Since the same quarter one year prior, revenues slightly dropped by 8.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • PENNANTPARK INVESTMENT CORP's earnings per share declined by 40.0% 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PENNANTPARK INVESTMENT CORP swung to a loss, reporting -$0.13 versus $1.66 in the prior year. This year, the market expects an improvement in earnings ($1.03 versus -$0.13).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Capital Markets industry. The net income has significantly decreased by 46.5% when compared to the same quarter one year ago, falling from $7.38 million to $3.95 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 Capital Markets industry and the overall market, PENNANTPARK INVESTMENT CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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