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 or Stephanie Link.

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."

Och-Ziff Capital Management Group

Dividend Yield: 14.60%

Och-Ziff Capital Management Group

(NYSE:

OZM

) shares currently have a dividend yield of 14.60%.

Och-Ziff Capital Management Group LLC is a publicly owned hedge fund sponsor. The firm provides investment advisory services for its clients. It invests in equity markets across the world. The firm makes its investments in alternative markets across the world. The company has a P/E ratio of 16.06.

The average volume for Och-Ziff Capital Management Group has been 738,500 shares per day over the past 30 days. Och-Ziff Capital Management Group has a market cap of $2.2 billion and is part of the financial services industry. Shares are up 7.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Och-Ziff Capital Management Group

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 deteriorating net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • OZM, with its decline in revenue, underperformed when compared the industry average of 13.4%. Since the same quarter one year prior, revenues fell by 37.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 45.69% is the gross profit margin for OCH-ZIFF CAPITAL MGMT LLC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, OZM's net profit margin of 12.31% is significantly lower than the industry average.
  • OCH-ZIFF CAPITAL MGMT LLC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, OCH-ZIFF CAPITAL MGMT LLC reported lower earnings of $0.75 versus $1.50 in the prior year. This year, the market expects an improvement in earnings ($1.47 versus $0.75).
  • The share price of OCH-ZIFF CAPITAL MGMT LLC has not done very well: it is down 13.89% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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 significantly underperformed when compared to that of the S&P 500 and the Capital Markets industry. The net income has significantly decreased by 57.5% when compared to the same quarter one year ago, falling from $199.06 million to $84.68 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

SMTP

Dividend Yield: 8.30%

SMTP

(NASDAQ:

SMTP

) shares currently have a dividend yield of 8.30%.

SMTP, Inc. provides Internet-based services to facilitate email delivery worldwide. It offers services to enable businesses of various scales to outsource the sending of outbound emails. The company has a P/E ratio of 34.18.

The average volume for SMTP has been 7,900 shares per day over the past 30 days. SMTP has a market cap of $31.6 million and is part of the internet industry. Shares are down 4.8% year-to-date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreet Ratings rates

SMTP

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. 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:

  • SMTP's revenue growth has slightly outpaced the industry average of 9.3%. Since the same quarter one year prior, revenues rose by 11.0%. 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.
  • SMTP 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 7.05, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for SMTP INC is currently very high, coming in at 80.99%. Regardless of SMTP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SMTP's net profit margin of -6.00% significantly underperformed when compared to the industry average.
  • Net operating cash flow has significantly decreased to -$0.01 million or 101.35% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The share price of SMTP INC has not done very well: it is down 7.04% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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Rait Financial

Dividend Yield: 9.90%

Rait Financial

(NYSE:

RAS

) shares currently have a dividend yield of 9.90%.

RAIT Financial Trust operates as a self-managed and self-advised real estate investment trust (REIT). The company, through its subsidiaries, invests in, manages, and services real estate-related assets with a focus on commercial real estate.

The average volume for Rait Financial has been 666,900 shares per day over the past 30 days. Rait Financial has a market cap of $601.5 million and is part of the real estate industry. Shares are down 5.7% year-to-date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreet Ratings rates

Rait Financial

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 24.2%. 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.
  • Net operating cash flow has increased to $27.05 million or 14.80% when compared to the same quarter last year. In addition, RAIT FINANCIAL TRUST has also vastly surpassed the industry average cash flow growth rate of -55.11%.
  • RAIT FINANCIAL TRUST's earnings per share declined by 16.7% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, RAIT FINANCIAL TRUST reported poor results of -$4.58 versus -$3.92 in the prior year. This year, the market expects an improvement in earnings (-$0.69 versus -$4.58).
  • 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, RAIT FINANCIAL TRUST's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for RAIT FINANCIAL TRUST is currently lower than what is desirable, coming in at 32.49%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -19.11% is significantly below that of the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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