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."

PennantPark Floating Rate Capital

Dividend Yield: 9.50%

PennantPark Floating Rate Capital

(NASDAQ:

PFLT

) shares currently have a dividend yield of 9.50%.

PennantPark Floating Rate Capital Ltd. is a business development company. It seeks to make secondary direct, debt, equity, and loan investments. The fund seeks to invest through floating rate loans in private or thinly traded or small market-cap, public middle market companies. The company has a P/E ratio of 8.71.

The average volume for PennantPark Floating Rate Capital has been 81,500 shares per day over the past 30 days. PennantPark Floating Rate Capital has a market cap of $179.1 million and is part of the financial services industry. Shares are down 10.6% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

PennantPark Floating Rate Capital

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 disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The gross profit margin for PENNANTPARK FLOATING RT CAP is currently very high, coming in at 71.00%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 66.52% significantly outperformed against the industry average.
  • PENNANTPARK FLOATING RT CAP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, PENNANTPARK FLOATING RT CAP increased its bottom line by earning $1.38 versus $1.30 in the prior year. For the next year, the market is expecting a contraction of 10.9% in earnings ($1.23 versus $1.38).
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, PFLT has underperformed the S&P 500 Index, declining 14.78% 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's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Capital Markets industry and the overall market, PENNANTPARK FLOATING RT CAP's return on equity is below that of both the industry average and the S&P 500.

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CSI Compressco

Dividend Yield: 14.60%

CSI Compressco

(NASDAQ:

CCLP

) shares currently have a dividend yield of 14.60%.

CSI Compressco LP provides compression services and equipment for natural gas and oil production, gathering, transportation, processing, and storage applications in the United States, Latin America, Canada, and internationally.

The average volume for CSI Compressco has been 109,900 shares per day over the past 30 days. CSI Compressco has a market cap of $453.6 million and is part of the energy industry. Shares are up 8.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

TheStreet Recommends

CSI Compressco

as a

hold

. Among the primary strengths of the company is its robust revenue growth -- not just in the most recent periods but in previous quarters as well. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from the ratings report include:

  • CCLP's very impressive revenue growth greatly exceeded the industry average of 22.5%. Since the same quarter one year prior, revenues leaped by 293.9%. 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 gross profit margin for CSI COMPRESSCO LP is currently lower than what is desirable, coming in at 33.04%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 0.91% trails that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 43.37%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 93.54% compared to 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.
  • CSI COMPRESSCO 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, CSI COMPRESSCO LP reported lower earnings of $0.61 versus $1.11 in the prior year. For the next year, the market is expecting a contraction of 75.4% in earnings ($0.15 versus $0.61).
  • 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 Energy Equipment & Services industry. The net income has significantly decreased by 76.2% when compared to the same quarter one year ago, falling from $4.88 million to $1.16 million.

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CSP

Dividend Yield: 7.50%

CSP

(NASDAQ:

CSPI

) shares currently have a dividend yield of 7.50%.

CSP Inc., together with its subsidiaries, develops and markets information technology (IT) integration solutions and high-performance cluster computer systems to industrial, commercial, and defense customers in the Americas, Europe, and Asia.

The average volume for CSP has been 5,600 shares per day over the past 30 days. CSP has a market cap of $21.6 million and is part of the computer software & services industry. Shares are down 21.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

CSP

as a

hold

. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

  • CSPI 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. To add to this, CSPI has a quick ratio of 1.65, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Despite the weak revenue results, CSPI has outperformed against the industry average of 21.7%. Since the same quarter one year prior, revenues slightly dropped by 1.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • CSP INC 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 not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, CSP INC increased its bottom line by earning $0.38 versus $0.10 in the prior year.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the IT Services industry and the overall market, CSP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CSP INC is rather low; currently it is at 23.63%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.11% significantly trails the industry average.

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