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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."

National American University Holdings

Dividend Yield: 7.70%

National American University Holdings

(NASDAQ:

NAUH

) shares currently have a dividend yield of 7.70%.

National American University Holdings, Inc. owns and operates National American University (NAU) that provides postsecondary education services primarily for working adults and other non-traditional students in the United States. The company operates through two segments, NAU and Other. The company has a P/E ratio of 17.92.

The average volume for National American University Holdings has been 14,200 shares per day over the past 30 days. National American University Holdings has a market cap of $58.7 million and is part of the diversified services industry. Shares are down 13.3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

National American University Holdings

TheStreet Recommends

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, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • NAUH's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.65, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for NATIONAL AMERN UNIV HLDG INC is currently very high, coming in at 75.09%. Regardless of NAUH's high profit margin, it has managed to decrease from the same period last year.
  • Net operating cash flow has decreased to $8.32 million or 47.26% when compared to the same quarter last year. Despite a decrease in cash flow of 47.26%, NATIONAL AMERN UNIV HLDG INC is still significantly exceeding the industry average of -151.46%.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Diversified Consumer Services industry and the overall market, NATIONAL AMERN UNIV HLDG INC's return on equity is below that of both the industry average and the S&P 500.

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Capitala Finance

Dividend Yield: 14.50%

Capitala Finance

(NASDAQ:

CPTA

) shares currently have a dividend yield of 14.50%.

Capitala Finance Corp. is a Business Development Company specializing in investments in traditional mezzanine, senior subordinated and unitranche debt, second-lien loans, equity securities issued by lower and traditional middle-market companies, and small and middle-market companies. The company has a P/E ratio of 71.89.

The average volume for Capitala Finance has been 72,600 shares per day over the past 30 days. Capitala Finance has a market cap of $204.0 million and is part of the financial services industry. Shares are down 27.6% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Capitala Finance

as a

hold

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

Highlights from the ratings report include:

  • CPTA's very impressive revenue growth greatly exceeded the industry average of 5.6%. Since the same quarter one year prior, revenues leaped by 63.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 2467.1% when compared to the same quarter one year prior, rising from $0.31 million to $7.96 million.
  • Net operating cash flow has increased to -$29.14 million or 44.66% when compared to the same quarter last year. Despite an increase in cash flow of 44.66%, CAPITALA FINANCE CORP is still growing at a significantly lower rate than the industry average of 275.70%.
  • CPTA'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 26.05%, 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. 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.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Capital Markets industry and the overall market, CAPITALA FINANCE CORP's return on equity is below that of both the industry average and the S&P 500.

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Compass Diversified Holdings

Dividend Yield: 9.20%

Compass Diversified Holdings

(NYSE:

CODI

) shares currently have a dividend yield of 9.20%.

Compass Diversified Holdings is a private equity firm specializing in acquisitions, buyouts, and middle market investments. It seeks to invest in manufacturing, distribution, consumer products, and business services sectors. The firm prefers to invest in companies based in North America. The company has a P/E ratio of 65.29.

The average volume for Compass Diversified Holdings has been 115,400 shares per day over the past 30 days. Compass Diversified Holdings has a market cap of $850.9 million and is part of the conglomerates industry. Shares are down 4.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Compass Diversified Holdings

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 15.2%. Since the same quarter one year prior, revenues rose by 47.3%. 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.
  • Despite currently having a low debt-to-equity ratio of 0.37, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that CODI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.58 is high and demonstrates strong liquidity.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Diversified Financial Services industry average. The net income has significantly decreased by 37.0% when compared to the same quarter one year ago, falling from $261.10 million to $164.41 million.
  • 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 Diversified Financial Services industry and the overall market on the basis of return on equity, COMPASS DIVERSIFIED HOLDINGS underperformed against that of the industry average and is significantly less than that of the S&P 500.

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