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."

NuStar GP Holdings

Dividend Yield: 8.80%

NuStar GP Holdings

(NYSE:

NSH

) shares currently have a dividend yield of 8.80%.

NuStar GP Holdings, LLC, through its ownership interests in NuStar Energy L.P., engages in the transportation of petroleum products and anhydrous ammonia. The company is also involved in the terminalling, storage, and marketing of petroleum products. The company has a P/E ratio of 17.03.

The average volume for NuStar GP Holdings has been 136,400 shares per day over the past 30 days. NuStar GP Holdings has a market cap of $1.1 billion and is part of the energy industry. Shares are up 16.3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

NuStar GP Holdings

as a

hold

. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • The gross profit margin for NUSTAR GP HOLDINGS LLC is currently very high, coming in at 100.00%. NSH has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, NSH's net profit margin of 98.00% significantly outperformed against the industry.
  • NSH, with its decline in revenue, underperformed when compared the industry average of 24.6%. Since the same quarter one year prior, revenues fell by 38.2%. 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 significantly 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 37.8% when compared to the same quarter one year ago, falling from $26.81 million to $16.68 million.
  • NUSTAR GP HOLDINGS LLC's earnings per share declined by 37.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, NUSTAR GP HOLDINGS LLC increased its bottom line by earning $1.68 versus $1.44 in the prior year. For the next year, the market is expecting a contraction of 10.4% in earnings ($1.51 versus $1.68).
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 35.75%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 37.09% 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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WhiteHorse Finance

Dividend Yield: 13.80%

WhiteHorse Finance

(NASDAQ:

WHF

) shares currently have a dividend yield of 13.80%.

Whitehorse Finance, LLC is a business development company. The company has a P/E ratio of 6.95.

The average volume for WhiteHorse Finance has been 27,700 shares per day over the past 30 days. WhiteHorse Finance has a market cap of $188.3 million and is part of the financial services industry. Shares are down 9.8% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

WhiteHorse Finance

as a

hold

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

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 24.3%. Since the same quarter one year prior, revenues rose by 19.0%. 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.
  • 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 15.9% when compared to the same quarter one year prior, going from $4.77 million to $5.53 million.
  • Looking at the price performance of WHF's shares over the past 12 months, there is not much good news to report: the stock is down 25.85%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Capital Markets industry and the overall market, WHITEHORSE FINANCE INC's return on equity significantly trails that of both the industry average and the S&P 500.

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Redwood

Dividend Yield: 8.00%

Redwood

(NYSE:

RWT

) shares currently have a dividend yield of 8.00%.

Redwood Trust, Inc., together with its subsidiaries, focuses on investing in mortgage- and other real estate-related assets; and engaging in residential and commercial mortgage banking activities in the United States. The company has a P/E ratio of 11.94.

The average volume for Redwood has been 542,600 shares per day over the past 30 days. Redwood has a market cap of $1.1 billion and is part of the real estate industry. Shares are up 6.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Redwood

as a

hold

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

Highlights from the ratings report include:

  • REDWOOD TRUST INC's earnings per share declined by 6.3% 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, REDWOOD TRUST INC increased its bottom line by earning $1.15 versus $1.13 in the prior year. This year, the market expects an improvement in earnings ($1.34 versus $1.15).
  • RWT, with its decline in revenue, underperformed when compared the industry average of 11.9%. Since the same quarter one year prior, revenues slightly dropped by 2.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, RWT has underperformed the S&P 500 Index, declining 18.33% 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.
  • 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 Real Estate Investment Trusts (REITs) industry average. The net income has decreased by 18.5% when compared to the same quarter one year ago, dropping from $14.80 million to $12.06 million.

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