Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer

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."

Monroe Capital

Dividend Yield: 9.50%

Monroe Capital

(NASDAQ:

MRCC

) shares currently have a dividend yield of 9.50%.

Monroe Capital Corporation is a business development company specializing in senior, unitranche and junior secured debt and, to a lesser extent, unsecured debt and equity investments in middle-market companies. The fund focuses on companies with a maximum of $25 million in EBITDA per year. The company has a P/E ratio of 12.01.

The average volume for Monroe Capital has been 69,500 shares per day over the past 30 days. Monroe Capital has a market cap of $178.5 million and is part of the real estate industry. Shares are up 1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Monroe Capital

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and growth in earnings per share. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 3.9%. Since the same quarter one year prior, revenues rose by 24.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, MONROE CAPITAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Net operating cash flow has declined marginally to -$15.10 million or 2.38% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, MONROE CAPITAL CORP has marginally lower results.

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Pennant Park Investment Corporation

Dividend Yield: 14.40%

Pennant Park Investment Corporation

(NASDAQ:

PNNT

) shares currently have a dividend yield of 14.40%.

PennantPark Investment Corporation is a publicly listed 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 4.69.

The average volume for Pennant Park Investment Corporation has been 377,200 shares per day over the past 30 days. Pennant Park Investment Corporation has a market cap of $585.0 million and is part of the financial services industry. Shares are down 18.3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Pennant Park Investment Corporation

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, 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:

  • PNNT's revenue growth has slightly outpaced the industry average of 3.9%. Since the same quarter one year prior, revenues rose by 12.6%. 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.
  • The gross profit margin for PENNANTPARK INVESTMENT CORP is rather high; currently it is at 67.19%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.29% is above that of the industry average.
  • 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 Capital Markets industry and the overall market on the basis of return on equity, PENNANTPARK INVESTMENT CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 30.06%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 83.60% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.

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Cross Timbers Royalty

Dividend Yield: 7.40%

Cross Timbers Royalty

(NYSE:

CRT

) shares currently have a dividend yield of 7.40%.

Cross Timbers Royalty Trust operates as an express trust in the United States. The company has a P/E ratio of 5.89.

The average volume for Cross Timbers Royalty has been 22,600 shares per day over the past 30 days. Cross Timbers Royalty has a market cap of $97.1 million and is part of the energy industry. Shares are down 10.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Cross Timbers Royalty

as a

hold

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and deteriorating net income.

Highlights from the ratings report include:

  • CRT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 14.69, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for CROSS TIMBERS ROYALTY TRUST is currently very high, coming in at 100.00%. CRT has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, CRT's net profit margin of 90.86% significantly outperformed against the industry.
  • Despite the weak revenue results, CRT has outperformed against the industry average of 38.8%. Since the same quarter one year prior, revenues fell by 27.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 39.0% when compared to the same quarter one year ago, falling from $4.20 million to $2.57 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 54.57%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 38.57% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

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