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."

Solar Capital

Dividend Yield: 9.10%

Solar Capital

(NASDAQ:

SLRC

) shares currently have a dividend yield of 9.10%.

Solar Capital Ltd. is a business development company specializing in investments in leveraged middle market companies. The company has a P/E ratio of 22.28.

The average volume for Solar Capital has been 148,300 shares per day over the past 30 days. Solar Capital has a market cap of $743.6 million and is part of the financial services industry. Shares are up 5.9% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Solar 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 a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • The gross profit margin for SOLAR CAPITAL LTD is rather high; currently it is at 68.17%. 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 -45.00% is in-line with the industry average.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 4.5%. Since the same quarter one year prior, revenues slightly dropped by 4.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • SOLAR 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 CAPITAL LTD reported lower earnings of $0.34 versus $1.12 in the prior year. This year, the market expects an improvement in earnings ($1.67 versus $0.34).
  • Net operating cash flow has significantly decreased to -$265.88 million or 379.62% 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 CAPITAL LTD has not done very well: it is down 14.41% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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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One Liberty Properties

Dividend Yield: 7.40%

One Liberty Properties

(NYSE:

OLP

) shares currently have a dividend yield of 7.40%.

One Liberty Properties, Inc., a real estate investment trust (REIT), engages in the acquisition, ownership, and management of commercial real estate properties in the United States. The company has a P/E ratio of 13.36.

The average volume for One Liberty Properties has been 37,300 shares per day over the past 30 days. One Liberty Properties has a market cap of $368.3 million and is part of the real estate industry. Shares are up 5.1% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

One Liberty Properties

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable 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, 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 7.9%. Since the same quarter one year prior, revenues rose by 21.2%. 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.
  • 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 55.2% when compared to the same quarter one year ago, falling from $11.58 million to $5.19 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, ONE LIBERTY PROPERTIES INC's return on equity is below that of both the industry average and the S&P 500.

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Alcentra Capital

Dividend Yield: 12.60%

Alcentra Capital

(NASDAQ:

ABDC

) shares currently have a dividend yield of 12.60%.

Alcentra Capital Corporation is a business development company specializing in investments in lower middle-market companies. The company has a P/E ratio of 7.42.

The average volume for Alcentra Capital has been 42,000 shares per day over the past 30 days. Alcentra Capital has a market cap of $146.4 million and is part of the financial services industry. Shares are down 7.8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Alcentra Capital

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins 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:

  • The revenue growth greatly exceeded the industry average of 4.5%. Since the same quarter one year prior, revenues rose by 45.1%. 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.
  • The gross profit margin for ALCENTRA CAPITAL CORP is currently very high, coming in at 77.23%. It has increased significantly from the same period last year. Along with this, the net profit margin of 38.25% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 77.69% to -$1.59 million when compared to the same quarter last year. Despite an increase in cash flow of 77.69%, ALCENTRA CAPITAL CORP is still growing at a significantly lower rate than the industry average of 139.02%.
  • The share price of ALCENTRA CAPITAL CORP has not done very well: it is down 21.55% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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, 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 Capital Markets industry. The net income has significantly decreased by 58.8% when compared to the same quarter one year ago, falling from $7.90 million to $3.25 million.

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