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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."

PennyMac Mortgage Investment

Dividend Yield: 11.30%

PennyMac Mortgage Investment

(NYSE:

PMT

) shares currently have a dividend yield of 11.30%.

PennyMac Mortgage Investment Trust, a specialty finance company, through its subsidiaries, invests primarily in residential mortgage loans and mortgage-related assets. The company operates through two segments, Correspondent Lending and Investment Activities. The company has a P/E ratio of 8.18.

The average volume for PennyMac Mortgage Investment has been 675,900 shares per day over the past 30 days. PennyMac Mortgage Investment has a market cap of $1.5 billion and is part of the real estate industry. Shares are down 7.9% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates

PennyMac Mortgage Investment

as a

TheStreet Recommends

hold

. The company's strengths can be seen in multiple areas, such as its attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, unimpressive growth in net income and disappointing return on equity.

Highlights from the ratings report include:

  • The gross profit margin for PENNYMAC MORTGAGE INVEST TR is rather high; currently it is at 58.18%. Regardless of PMT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PMT's net profit margin of 39.29% significantly outperformed against the industry.
  • PMT, with its decline in revenue, underperformed when compared the industry average of 9.8%. Since the same quarter one year prior, revenues fell by 19.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • PENNYMAC MORTGAGE INVEST TR's earnings per share declined by 44.4% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, PENNYMAC MORTGAGE INVEST TR reported lower earnings of $3.02 versus $3.08 in the prior year. For the next year, the market is expecting a contraction of 17.2% in earnings ($2.50 versus $3.02).
  • 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 28.9% when compared to the same quarter one year ago, falling from $53.30 million to $37.87 million.

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

American Capital Agency

Dividend Yield: 11.30%

American Capital Agency

(NASDAQ:

AGNC

) shares currently have a dividend yield of 11.30%.

American Capital Agency Corp. operates as a real estate investment trust (REIT). The company has a P/E ratio of 10.36.

The average volume for American Capital Agency has been 4,654,100 shares per day over the past 30 days. American Capital Agency has a market cap of $8.2 billion and is part of the real estate industry. Shares are up 18.9% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates

American Capital Agency

as a

hold

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

Highlights from the ratings report include:

  • The revenue fell significantly faster than the industry average of 9.8%. Since the same quarter one year prior, revenues fell by 27.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for AMERICAN CAPITAL AGENCY CORP is currently very high, coming in at 90.79%. Regardless of AGNC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AGNC's net profit margin of -37.10% significantly underperformed when compared to the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, AMERICAN CAPITAL AGENCY CORP's return on equity is below that of both the industry average and the S&P 500.
  • AMERICAN CAPITAL AGENCY CORP 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, AMERICAN CAPITAL AGENCY CORP reported lower earnings of $3.17 versus $4.40 in the prior year. For the next year, the market is expecting a contraction of 45.6% in earnings ($1.73 versus $3.17).
  • 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 161.0% when compared to the same quarter one year ago, falling from $231.00 million to -$141.00 million.

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

CPFL Energy

Dividend Yield: 6.10%

CPFL Energy

(NYSE:

CPL

) shares currently have a dividend yield of 6.10%.

CPFL Energia S.A., together with its subsidiaries, generates, distributes, and commercializes electricity to industrial, residential, commercial, rural, and other consumers in Brazil. The company has a P/E ratio of 20.77.

The average volume for CPFL Energy has been 558,800 shares per day over the past 30 days. CPFL Energy has a market cap of $8.1 billion and is part of the utilities industry. Shares are up 6.6% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates

CPFL Energy

as a

hold

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

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the Electric Utilities industry average, but is less than that of the S&P 500. The net income increased by 28.4% when compared to the same quarter one year prior, rising from $85.88 million to $110.28 million.
  • Net operating cash flow has increased to $256.51 million or 21.06% when compared to the same quarter last year. In addition, CPFL ENERGIA SA has also modestly surpassed the industry average cash flow growth rate of 18.19%.
  • CPFL ENERGIA SA 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, CPFL ENERGIA SA reported lower earnings of $0.80 versus $1.18 in the prior year. This year, the market expects an improvement in earnings ($0.86 versus $0.80).
  • The debt-to-equity ratio is very high at 2.37 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, CPL's quick ratio is somewhat strong at 1.15, demonstrating the ability to handle short-term liquidity needs.
  • 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 Electric Utilities industry and the overall market on the basis of return on equity, CPFL ENERGIA SA has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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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