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."

Icahn

Dividend Yield: 7.80%

Icahn

(NASDAQ:

IEP

) shares currently have a dividend yield of 7.80%.

Icahn Enterprises L.P., through its subsidiaries, operates in investment, automotive, energy, metals, railcar, gaming, food packaging, real estate, and home fashion businesses in the United States, Germany, and Internationally. Its Investment segment operates various private investment funds.

The average volume for Icahn has been 99,100 shares per day over the past 30 days. Icahn has a market cap of $9.8 billion and is part of the conglomerates industry. Shares are down 16.8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Icahn

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 deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 1041.66% to $339.00 million when compared to the same quarter last year. In addition, ICAHN ENTERPRISES LP has also vastly surpassed the industry average cash flow growth rate of -62.23%.
  • IEP, with its decline in revenue, underperformed when compared the industry average of 11.7%. Since the same quarter one year prior, revenues fell by 22.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • ICAHN ENTERPRISES LP 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ICAHN ENTERPRISES LP swung to a loss, reporting -$2.92 versus $8.98 in the prior year. This year, the market expects an improvement in earnings ($5.80 versus -$2.92).
  • The debt-to-equity ratio is very high at 2.30 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • 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 Industrial Conglomerates industry and the overall market, ICAHN ENTERPRISES LP's return on equity significantly trails that of both the industry average and the S&P 500.

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Alliance Holdings GP

Dividend Yield: 11.90%

Alliance Holdings GP

(NASDAQ:

AHGP

) shares currently have a dividend yield of 11.90%.

Alliance Holdings GP, L.P., through its subsidiaries, produces and markets coal primarily to utilities and industrial users in the United States. It produces a range of steam coal with varying sulfur and heat contents. The company has a P/E ratio of 7.24.

The average volume for Alliance Holdings GP has been 72,000 shares per day over the past 30 days. Alliance Holdings GP has a market cap of $1.9 billion and is part of the metals & mining industry. Shares are down 50.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Recommends

TheStreet Ratings rates

Alliance Holdings GP

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 34.1%. Since the same quarter one year prior, revenues slightly increased by 1.0%. 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.
  • 36.68% is the gross profit margin for ALLIANCE HOLDINGS GP LP which we consider to be strong. Regardless of AHGP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AHGP's net profit margin of 10.08% compares favorably to the industry average.
  • Currently the debt-to-equity ratio of 1.50 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, AHGP's quick ratio is somewhat strong at 1.14, demonstrating the ability to handle short-term liquidity needs.
  • Net operating cash flow has decreased to $176.67 million or 26.04% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, ALLIANCE HOLDINGS GP LP has marginally lower results.

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CM Finance

Dividend Yield: 12.50%

CM Finance

(NASDAQ:

CMFN

) shares currently have a dividend yield of 12.50%.

CM Finance Inc. is a business development company. The company has a P/E ratio of 7.90.

The average volume for CM Finance has been 34,600 shares per day over the past 30 days. CM Finance has a market cap of $151.2 million and is part of the financial services industry. Shares are down 2.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

CM Finance

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • CMFN's very impressive revenue growth greatly exceeded the industry average of 5.1%. Since the same quarter one year prior, revenues leaped by 74.4%. 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.
  • Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, CM FINANCE INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • CM FINANCE INC's earnings per share declined by 5.5% 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, CM FINANCE INC increased its bottom line by earning $1.13 versus $0.81 in the prior year. This year, the market expects an improvement in earnings ($1.41 versus $1.13).
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, CMFN has underperformed the S&P 500 Index, declining 12.48% 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.
  • Net operating cash flow has significantly decreased to -$10.57 million or 867.67% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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