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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."

Select Income REIT

Dividend Yield: 10.90%

Select Income REIT

(NYSE:

SIR

) shares currently have a dividend yield of 10.90%.

Select Income REIT, a real estate investment trust (REIT), primarily owns and invests in single tenant and net leased properties. The company has a P/E ratio of 15.05.

The average volume for Select Income REIT has been 670,000 shares per day over the past 30 days. Select Income REIT has a market cap of $1.6 billion and is part of the real estate industry. Shares are down 23.7% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Select Income REIT

TheStreet Recommends

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive 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, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • SIR's very impressive revenue growth greatly exceeded the industry average of 9.7%. Since the same quarter one year prior, revenues leaped by 89.2%. 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.
  • 45.58% is the gross profit margin for SELECT INCOME REIT which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 27.17% trails the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Real Estate Investment Trusts (REITs) industry average, but is greater than that of the S&P 500. The net income has decreased by 3.5% when compared to the same quarter one year ago, dropping from $30.21 million to $29.14 million.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, SELECT INCOME REIT's return on equity is below that of both the industry average and the S&P 500.

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ONEOK

Dividend Yield: 7.00%

ONEOK

(NYSE:

OKE

) shares currently have a dividend yield of 7.00%.

ONEOK, Inc., through its general partner interests in ONEOK Partners, L.P., engages in the gathering, processing, storage, and transportation of natural gas in the United States. The company has a P/E ratio of 24.64.

The average volume for ONEOK has been 2,695,400 shares per day over the past 30 days. ONEOK has a market cap of $7.2 billion and is part of the utilities industry. Shares are down 30% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

ONEOK

as a

hold

. The company's strengths can be seen in multiple areas, such as its increase in net income, notable return on equity and good cash flow from operations. 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 poor profit margins.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 24.2% when compared to the same quarter one year prior, going from $61.59 million to $76.51 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ONEOK INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 34.3%. Since the same quarter one year prior, revenues fell by 30.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • OKE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 47.95%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, OKE is still more expensive than most of the other companies in its industry.
  • The debt-to-equity ratio is very high at 17.05 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.35, which clearly demonstrates the inability to cover short-term cash needs.

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Mattel

Dividend Yield: 6.70%

Mattel

(NASDAQ:

MAT

) shares currently have a dividend yield of 6.70%.

Mattel, Inc. designs, manufactures, and markets a range of toy products worldwide. The company operates in three segments: North America, International, and American Girl. The company has a P/E ratio of 18.93.

The average volume for Mattel has been 4,837,100 shares per day over the past 30 days. Mattel has a market cap of $7.7 billion and is part of the consumer durables industry. Shares are down 25.3% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Mattel

as a

hold

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

Highlights from the ratings report include:

  • The gross profit margin for MATTEL INC is rather high; currently it is at 53.72%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -1.14% trails the industry average.
  • MAT, with its decline in revenue, slightly underperformed the industry average of 1.6%. Since the same quarter one year prior, revenues slightly dropped by 7.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 Leisure Equipment & Products industry. The net income has significantly decreased by 140.1% when compared to the same quarter one year ago, falling from $28.33 million to -$11.35 million.
  • Net operating cash flow has decreased to -$187.66 million or 34.29% 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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