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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."

M.D.C. Holdings

Dividend Yield: 4.30%

M.D.C. Holdings

(NYSE:

MDC

) shares currently have a dividend yield of 4.30%.

M.D.C. Holdings, Inc., through its subsidiaries, engages in homebuilding and financial services businesses in the United States. The company has a P/E ratio of 17.04.

The average volume for M.D.C. Holdings has been 568,900 shares per day over the past 30 days. M.D.C. Holdings has a market cap of $1.2 billion and is part of the materials & construction industry. Shares are down 7.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

M.D.C. Holdings

as a

hold

. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, a generally disappointing performance in the stock itself and poor profit margins.

Highlights from the ratings report include:

  • MDC HOLDINGS INC has improved earnings per share by 17.6% 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, MDC HOLDINGS INC increased its bottom line by earning $1.34 versus $1.29 in the prior year. This year, the market expects an improvement in earnings ($2.08 versus $1.34).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.9%. Since the same quarter one year prior, revenues slightly increased by 5.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MDC's debt-to-equity ratio of 0.73 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.
  • MDC has underperformed the S&P 500 Index, declining 17.66% from its price level of one year ago. 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.
  • Net operating cash flow has significantly decreased to -$14.99 million or 197.14% 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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Abercrombie & Fitch

Dividend Yield: 4.10%

Abercrombie & Fitch

(NYSE:

ANF

) shares currently have a dividend yield of 4.10%.

Abercrombie & Fitch Co., through its subsidiaries, operates as a specialty retailer of casual apparel. The company has a P/E ratio of 38.27.

The average volume for Abercrombie & Fitch has been 2,548,300 shares per day over the past 30 days. Abercrombie & Fitch has a market cap of $1.3 billion and is part of the retail industry. Shares are down 27.8% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Abercrombie & Fitch

as a

hold

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income 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:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 37.4% when compared to the same quarter one year prior, rising from -$63.25 million to -$39.60 million.
  • ABERCROMBIE & FITCH has improved earnings per share by 35.2% 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, ABERCROMBIE & FITCH reported lower earnings of $0.53 versus $0.73 in the prior year. This year, the market expects an improvement in earnings ($0.96 versus $0.53).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 6.6%. Since the same quarter one year prior, revenues slightly dropped by 3.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • After a year of stock price fluctuations, the net result is that ANF'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. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

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Pebblebrook Hotel

Dividend Yield: 6.00%

Pebblebrook Hotel

(NYSE:

PEB

) shares currently have a dividend yield of 6.00%.

Pebblebrook Hotel Trust, through Pebblebrook Hotel, L.P., operates as a real estate investment trust. The company acquires and invests primarily in hotel properties located in the United States. The company has a P/E ratio of 24.52.

The average volume for Pebblebrook Hotel has been 828,300 shares per day over the past 30 days. Pebblebrook Hotel has a market cap of $1.8 billion and is part of the real estate industry. Shares are down 4.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Pebblebrook Hotel

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • PEB's revenue growth has slightly outpaced the industry average of 11.9%. Since the same quarter one year prior, revenues rose by 20.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • PEBBLEBROOK HOTEL 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, PEBBLEBROOK HOTEL TRUST increased its bottom line by earning $0.94 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($1.07 versus $0.94).
  • PEB'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 39.92%, 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.
  • The gross profit margin for PEBBLEBROOK HOTEL TRUST is currently extremely low, coming in at 13.40%. Regardless of PEB's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, PEB's net profit margin of 8.63% is significantly lower than the industry average.

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