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."

Plains All American Pipeline

Dividend Yield: 13.30%

Plains All American Pipeline

(NYSE:

PAA

) shares currently have a dividend yield of 13.30%.

Plains All American Pipeline, L.P., through with its subsidiaries, engages in the transportation, storage, terminalling, and marketing of crude oil, natural gas liquids (NGL), natural gas, and refined products in the United States and Canada. The company has a P/E ratio of 17.37.

The average volume for Plains All American Pipeline has been 3,775,200 shares per day over the past 30 days. Plains All American Pipeline has a market cap of $8.4 billion and is part of the energy industry. Shares are down 60.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Plains All American Pipeline

as a

hold

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 78.41% to $562.00 million when compared to the same quarter last year. In addition, PLAINS ALL AMER PIPELNE -LP has also vastly surpassed the industry average cash flow growth rate of -26.50%.
  • Along with the very weak revenue results, PAA underperformed when compared to the industry average of 36.8%. Since the same quarter one year prior, revenues plummeted by 50.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • PLAINS ALL AMER PIPELNE -LP 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, PLAINS ALL AMER PIPELNE -LP reported lower earnings of $2.37 versus $2.80 in the prior year. For the next year, the market is expecting a contraction of 32.9% in earnings ($1.59 versus $2.37).
  • The debt-to-equity ratio of 1.31 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, PAA has a quick ratio of 0.54, this demonstrates the lack of ability of the company to cover short-term liquidity needs.

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Lexington Realty

Dividend Yield: 8.30%

Lexington Realty

(NYSE:

LXP

) shares currently have a dividend yield of 8.30%.

Lexington Corporate Properties Trust operates as a self-managed and self-administered real estate investment trust (REIT). The company acquires, owns, and manages a portfolio of office, industrial, and retail properties net-leased to corporate tenants in the United States. The company has a P/E ratio of 25.75.

The average volume for Lexington Realty has been 1,480,500 shares per day over the past 30 days. Lexington Realty has a market cap of $1.9 billion and is part of the real estate industry. Shares are down 25.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Lexington Realty

as a

hold

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • Net operating cash flow has increased to $68.97 million or 11.54% when compared to the same quarter last year. In addition, LEXINGTON REALTY TRUST has also modestly surpassed the industry average cash flow growth rate of 9.39%.
  • LEXINGTON REALTY TRUST 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. 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, LEXINGTON REALTY TRUST turned its bottom line around by earning $0.17 versus -$0.18 in the prior year. This year, the market expects an improvement in earnings ($0.40 versus $0.17).
  • The gross profit margin for LEXINGTON REALTY TRUST is rather low; currently it is at 18.63%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -5.66% is significantly below that of the industry average.
  • 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 114.8% when compared to the same quarter one year ago, falling from $40.41 million to -$5.98 million.

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Covanta

Dividend Yield: 6.30%

Covanta

(NYSE:

CVA

) shares currently have a dividend yield of 6.30%.

Covanta Holding Corporation provides waste and energy services to municipal entities primarily worldwide. It owns and operates infrastructure for the conversion of waste to energy, as well as engages in other waste disposal and renewable energy production businesses.

The average volume for Covanta has been 1,169,000 shares per day over the past 30 days. Covanta has a market cap of $2.1 billion and is part of the materials & construction industry. Shares are down 28.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Covanta

as a

hold

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

Highlights from the ratings report include:

  • CVA's revenue growth has slightly outpaced the industry average of 5.7%. Since the same quarter one year prior, revenues slightly increased by 1.9%. 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 Commercial Services & Supplies industry. The net income increased by 385.7% when compared to the same quarter one year prior, rising from $7.00 million to $34.00 million.
  • Net operating cash flow has remained constant at $123.00 million with no significant change when compared to the same quarter last year. In addition, COVANTA HOLDING CORP has modestly surpassed the industry average cash flow growth rate of -7.66%.
  • The gross profit margin for COVANTA HOLDING CORP is currently lower than what is desirable, coming in at 34.12%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 8.05% is above that of the industry average.
  • 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 Commercial Services & Supplies industry and the overall market, COVANTA HOLDING CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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