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."

PDL BioPharma

Dividend Yield: 11.50%

PDL BioPharma

(NASDAQ:

PDLI

) shares currently have a dividend yield of 11.50%.

PDL BioPharma, Inc. manages a portfolio of patents and royalty assets in the United States and Europe. The company is involved in the humanization of monoclonal antibodies and the discovery of a new generation of targeted treatments for cancer and immunologic diseases. It offers Queen et al. The company has a P/E ratio of 2.76.

The average volume for PDL BioPharma has been 2,529,600 shares per day over the past 30 days. PDL BioPharma has a market cap of $857.0 million and is part of the drugs industry. Shares are down 30.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

PDL BioPharma

as a

hold

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

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.8%. Since the same quarter one year prior, revenues slightly increased by 1.1%. 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.
  • PDLI's debt-to-equity ratio of 0.67 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that PDLI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.50 is high and demonstrates strong liquidity.
  • Looking at the price performance of PDLI's shares over the past 12 months, there is not much good news to report: the stock is down 46.79%, 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.
  • 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 Biotechnology industry average. The net income has decreased by 15.0% when compared to the same quarter one year ago, dropping from $92.06 million to $78.26 million.

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Cypress Semiconductor

Dividend Yield: 4.30%

Cypress Semiconductor

(NASDAQ:

CY

) shares currently have a dividend yield of 4.30%.

Cypress Semiconductor Corporation provides mixed-signal programmable solutions, semiconductor memories, and integrated semiconductor solutions worldwide.

The average volume for Cypress Semiconductor has been 7,913,300 shares per day over the past 30 days. Cypress Semiconductor has a market cap of $3.4 billion and is part of the electronics industry. Shares are down 29.6% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Cypress Semiconductor

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • CY's very impressive revenue growth greatly exceeded the industry average of 11.5%. Since the same quarter one year prior, revenues leaped by 164.0%. 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.
  • CY's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that CY's debt-to-equity ratio is low, the quick ratio, which is currently 0.66, displays a potential problem in covering short-term cash needs.
  • Net operating cash flow has significantly decreased to -$65.31 million or 247.39% 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 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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 1045.2% when compared to the same quarter one year ago, falling from $9.53 million to -$90.05 million.

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Colony Capital

Dividend Yield: 7.10%

Colony Capital

(NYSE:

CLNY

) shares currently have a dividend yield of 7.10%.

Colony Capital, Inc., a commercial real estate and investment management company, acquires, originates, and manages a portfolio of real estate-related debt and equity investments in North America and Europe. The company has a P/E ratio of 23.37.

The average volume for Colony Capital has been 1,079,800 shares per day over the past 30 days. Colony Capital has a market cap of $2.3 billion and is part of the real estate industry. Shares are down 11.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Colony Capital

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels and compelling growth in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:

  • CLNY's very impressive revenue growth greatly exceeded the industry average of 9.7%. Since the same quarter one year prior, revenues leaped by 181.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • COLONY CAPITAL INC has improved earnings per share by 17.6% 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, COLONY CAPITAL INC reported lower earnings of $1.00 versus $1.19 in the prior year. This year, the market expects an improvement in earnings ($2.05 versus $1.00).
  • After a year of stock price fluctuations, the net result is that CLNY's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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'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 on the basis of return on equity, COLONY CAPITAL INC underperformed against that of the industry average and is significantly less than that of the S&P 500.

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