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."

Psychemedics

Dividend Yield: 7.40%

Psychemedics

(NASDAQ:

PMD

) shares currently have a dividend yield of 7.40%.

Psychemedics Corporation provides testing services for the detection of drugs of abuse through the analysis of hair samples in the United States and internationally. The company has a P/E ratio of 22.08.

The average volume for Psychemedics has been 13,100 shares per day over the past 30 days. Psychemedics has a market cap of $43.7 million and is part of the health services industry. Shares are down 20.5% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Psychemedics

as a

hold

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and reasonable valuation levels. However, as a counter to these strengths, 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:

  • The current debt-to-equity ratio, 0.52, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, PMD has a quick ratio of 2.08, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for PSYCHEMEDICS CORP is rather high; currently it is at 54.38%. Regardless of PMD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PMD's net profit margin of 11.23% compares favorably to the industry average.
  • PMD, with its decline in revenue, underperformed when compared the industry average of 10.1%. Since the same quarter one year prior, revenues slightly dropped by 8.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 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 the Health Care Providers & Services industry average. The net income has decreased by 13.2% when compared to the same quarter one year ago, dropping from $0.92 million to $0.80 million.
  • Net operating cash flow has significantly decreased to $0.19 million or 89.24% 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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Solar Senior Capital

Dividend Yield: 10.20%

Solar Senior Capital

(NASDAQ:

SUNS

) shares currently have a dividend yield of 10.20%.

Solar Senior Capital Ltd. is a business development company specializing in investments in leveraged, middle-market companies in the United States. The fund invests in the form of senior secured loans, including first lien, unitranche, and second lien debt instruments. The company has a P/E ratio of 13.52.

The average volume for Solar Senior Capital has been 24,100 shares per day over the past 30 days. Solar Senior Capital has a market cap of $159.5 million and is part of the financial services industry. Shares are down 7.2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

TheStreet Recommends

Solar Senior Capital

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth and expanding profit margins. 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 revenue growth came in higher than the industry average of 0.4%. Since the same quarter one year prior, revenues rose by 22.5%. 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 SOLAR SENIOR CAPITAL LTD is currently very high, coming in at 76.38%. Regardless of SUNS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SUNS's net profit margin of -22.92% significantly underperformed when compared to the industry average.
  • SOLAR SENIOR CAPITAL LTD 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SOLAR SENIOR CAPITAL LTD reported lower earnings of $1.02 versus $1.11 in the prior year. This year, the market expects an improvement in earnings ($1.33 versus $1.02).
  • Net operating cash flow has significantly decreased to -$3.14 million or 103.99% 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 SOLAR SENIOR CAPITAL LTD is down 9.64% when compared to where it was trading one year earlier. This reflects both (a) the trend in the overall market as well as (b) the sharp decline in the company's earnings per share. 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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Consolidated Communications

Dividend Yield: 8.00%

Consolidated Communications

(NASDAQ:

CNSL

) shares currently have a dividend yield of 8.00%.

Consolidated Communications Holdings, Inc., through its subsidiaries, provides various integrated communications services to residential and business clients.

The average volume for Consolidated Communications has been 195,800 shares per day over the past 30 days. Consolidated Communications has a market cap of $972.8 million and is part of the telecommunications industry. Shares are down 8.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Consolidated Communications

as a

hold

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

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 11.2%. Since the same quarter one year prior, revenues rose by 30.1%. 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.
  • Net operating cash flow has significantly increased by 55.05% to $71.82 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 29.74%.
  • The gross profit margin for CONSOLIDATED COMM HLDGS INC is rather high; currently it is at 57.10%. Regardless of CNSL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.33% trails the industry average.
  • The debt-to-equity ratio is very high at 5.34 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, CNSL maintains a poor quick ratio of 0.80, which illustrates the inability to avoid short-term cash problems.
  • 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 Diversified Telecommunication Services industry and the overall market, CONSOLIDATED COMM HLDGS INC's return on equity significantly trails that of both the industry average and the S&P 500.

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