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."

OFS Capital

Dividend Yield: 11.60%

OFS Capital

(NASDAQ:

OFS

) shares currently have a dividend yield of 11.60%.

OFS Capital Corporation is a business development company specializing in direct and fund investments. For direct, it specializes in debt and structured equity investments in lower middle market companies. The fund invests in companies based in United States. The company has a P/E ratio of 11.65.

The average volume for OFS Capital has been 18,000 shares per day over the past 30 days. OFS Capital has a market cap of $113.7 million and is part of the financial services industry. Shares are up 1.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

OFS Capital

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 weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • OFS's very impressive revenue growth greatly exceeded the industry average of 5.9%. Since the same quarter one year prior, revenues leaped by 52.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • OFS CAPITAL 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 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, OFS CAPITAL CORP increased its bottom line by earning $1.03 versus $0.81 in the prior year. This year, the market expects an improvement in earnings ($1.25 versus $1.03).
  • OFS has underperformed the S&P 500 Index, declining 8.63% 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.
  • Net operating cash flow has significantly decreased to $7.01 million or 59.20% 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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Fifth Street Finance Corporation

Dividend Yield: 11.20%

Fifth Street Finance Corporation

(NASDAQ:

FSC

) shares currently have a dividend yield of 11.20%.

Fifth Street Finance Corp. The company has a P/E ratio of 8.05.

The average volume for Fifth Street Finance Corporation has been 867,300 shares per day over the past 30 days. Fifth Street Finance Corporation has a market cap of $987.5 million and is part of the financial services industry. Shares are down 19% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Fifth Street Finance Corporation

as a

hold

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

  • The gross profit margin for FIFTH STREET FINANCE CORP is rather high; currently it is at 64.98%. Regardless of FSC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FSC's net profit margin of 37.27% significantly outperformed against the industry.
  • Net operating cash flow has significantly increased by 161.67% to $173.18 million when compared to the same quarter last year. Despite an increase in cash flow, FIFTH STREET FINANCE CORP's cash flow growth rate is still lower than the industry average growth rate of 188.71%.
  • FSC, with its decline in revenue, underperformed when compared the industry average of 5.9%. Since the same quarter one year prior, revenues slightly dropped by 5.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 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 on the basis of return on equity, FIFTH STREET FINANCE CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Looking at the price performance of FSC's shares over the past 12 months, there is not much good news to report: the stock is down 34.11%, 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. 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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Xinyuan Real Estate

Dividend Yield: 7.20%

Xinyuan Real Estate

(NYSE:

XIN

) shares currently have a dividend yield of 7.20%.

Xinyuan Real Estate Co., Ltd., through its subsidiaries, develops residential real estate properties for middle-income consumers in China. It acquires development sites through public auctions of government land and direct negotiations. The company has a P/E ratio of 1.63.

The average volume for Xinyuan Real Estate has been 191,000 shares per day over the past 30 days. Xinyuan Real Estate has a market cap of $203.6 million and is part of the real estate industry. Shares are up 22% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Xinyuan Real Estate

as a

hold

. Among the primary strengths of the company is its attractive valuation levels, considering its current price compared to earnings, book value and other measures. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk.

Highlights from the ratings report include:

  • The revenue fell significantly faster than the industry average of 18.2%. Since the same quarter one year prior, revenues fell by 26.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The gross profit margin for XINYUAN REAL ESTATE CO -ADR is currently lower than what is desirable, coming in at 28.78%. Regardless of XIN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.69% trails the industry average.
  • Currently the debt-to-equity ratio of 1.79 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.48, which clearly demonstrates the inability to cover short-term cash needs.
  • 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. When compared to other companies in the Real Estate Management & Development industry and the overall market, XINYUAN REAL ESTATE CO -ADR's return on equity is below that of both the industry average and the S&P 500.

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