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."

Lexington Realty

Dividend Yield: 9.00%

Lexington Realty

(NYSE:

LXP

) shares currently have a dividend yield of 9.00%.

Lexington Corporate Properties Trust operates as a self-managed and self-administered real estate investment trust (REIT). The company acquires, owns, and manages a portfolio of office, industrial, and retail properties net-leased to corporate tenants in the United States. The company has a P/E ratio of 17.16.

The average volume for Lexington Realty has been 1,491,400 shares per day over the past 30 days. Lexington Realty has a market cap of $1.8 billion and is part of the real estate industry. Shares are down 4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Lexington Realty

as a

hold

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • 45.81% is the gross profit margin for LEXINGTON REALTY TRUST which we consider to be strong. It has increased significantly from the same period last year. Along with this, the net profit margin of 32.43% is above that of the industry average.
  • LEXINGTON REALTY TRUST 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, LEXINGTON REALTY TRUST increased its bottom line by earning $0.44 versus $0.17 in the prior year. For the next year, the market is expecting a contraction of 18.2% in earnings ($0.36 versus $0.44).
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry average. The net income has decreased by 6.7% when compared to the same quarter one year ago, dropping from $37.36 million to $34.85 million.
  • LXP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 31.79%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. 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.

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Six Flags Entertainment

Dividend Yield: 4.50%

Six Flags Entertainment

(NYSE:

SIX

) shares currently have a dividend yield of 4.50%.

Six Flags Entertainment Corporation owns and operates regional theme and water parks. Its parks offer various thrill rides, water attractions, themed areas, concerts and shows, restaurants, game venues, and retail outlets. The company has a P/E ratio of 32.59.

The average volume for Six Flags Entertainment has been 861,300 shares per day over the past 30 days. Six Flags Entertainment has a market cap of $4.7 billion and is part of the leisure industry. Shares are down 6.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Six Flags Entertainment

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and premium valuation.

Highlights from the ratings report include:

  • SIX's revenue growth has slightly outpaced the industry average of 12.9%. Since the same quarter one year prior, revenues rose by 18.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SIX FLAGS ENTERTAINMENT 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, SIX FLAGS ENTERTAINMENT CORP increased its bottom line by earning $1.58 versus $0.73 in the prior year. This year, the market expects an improvement in earnings ($1.84 versus $1.58).
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • The debt-to-equity ratio is very high at 62.17 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.

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Bank of Montreal

Dividend Yield: 4.60%

Bank of Montreal

(NYSE:

BMO

) shares currently have a dividend yield of 4.60%.

Bank of Montreal provides diversified financial services primarily in North America. The company has a P/E ratio of 11.16.

The average volume for Bank of Montreal has been 838,300 shares per day over the past 30 days. Bank of Montreal has a market cap of $34.4 billion and is part of the banking industry. Shares are down 3.9% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Bank of Montreal

as a

hold

. The company's strengths can be seen in multiple areas, such as its expanding profit margins, growth in earnings per share 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, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • The gross profit margin for BANK OF MONTREAL is currently very high, coming in at 79.66%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.41% is above that of the industry average.
  • BANK OF MONTREAL has improved earnings per share by 8.2% 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 year. During the past fiscal year, BANK OF MONTREAL increased its bottom line by earning $6.58 versus $6.41 in the prior year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Commercial Banks industry average. The net income increased by 7.5% when compared to the same quarter one year prior, going from $986.00 million to $1,060.00 million.
  • Net operating cash flow has declined marginally to $9,419.00 million or 3.92% when compared to the same quarter last year. Despite a decrease in cash flow of 3.92%, BANK OF MONTREAL is still significantly exceeding the industry average of -89.66%.
  • BMO is off 13.02% from its price level of one year ago, reflecting the general market trend and ignoring their higher earnings per share 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.

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