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."

Staples

Dividend Yield: 5.00%

Staples

(NASDAQ:

SPLS

) shares currently have a dividend yield of 5.00%.

Staples, Inc., together with its subsidiaries, operates office products superstores. It operates through three segments: North American Stores & Online, North American Commercial, and International Operations. The company has a P/E ratio of 192.40.

The average volume for Staples has been 10,389,000 shares per day over the past 30 days. Staples has a market cap of $6.2 billion and is part of the specialty retail industry. Shares are down 46.9% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Staples

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

Highlights from the ratings report include:

  • SPLS's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.83 is somewhat weak and could be cause for future problems.
  • SPLS, with its decline in revenue, underperformed when compared the industry average of 4.4%. Since the same quarter one year prior, revenues slightly dropped by 6.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • STAPLES INC's earnings per share declined by 8.8% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, STAPLES INC reported lower earnings of $0.21 versus $1.09 in the prior year. This year, the market expects an improvement in earnings ($0.92 versus $0.21).
  • Net operating cash flow has decreased to $403.00 million or 33.34% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Specialty Retail industry and the overall market, STAPLES INC's return on equity significantly trails that of both the industry average and the S&P 500.

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Lexington Realty

Dividend Yield: 8.30%

Lexington Realty

(NYSE:

LXP

) shares currently have a dividend yield of 8.30%.

Lexington Corporate Properties Trust operates as a self-managed and self-administered real estate investment trust (REIT). The company acquires, owns, and manages a portfolio of office, industrial, and retail properties net-leased to corporate tenants in the United States. The company has a P/E ratio of 25.56.

The average volume for Lexington Realty has been 1,496,500 shares per day over the past 30 days. Lexington Realty has a market cap of $1.9 billion and is part of the real estate industry. Shares are down 25.4% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Lexington Realty

as a

hold

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • Net operating cash flow has increased to $68.97 million or 11.54% when compared to the same quarter last year. In addition, LEXINGTON REALTY TRUST has also modestly surpassed the industry average cash flow growth rate of 9.44%.
  • LEXINGTON REALTY TRUST 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 reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LEXINGTON REALTY TRUST turned its bottom line around by earning $0.17 versus -$0.18 in the prior year. This year, the market expects an improvement in earnings ($0.40 versus $0.17).
  • The gross profit margin for LEXINGTON REALTY TRUST is rather low; currently it is at 18.63%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -5.66% is significantly below that of the industry average.
  • 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 114.8% when compared to the same quarter one year ago, falling from $40.41 million to -$5.98 million.

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Golar LNG

Dividend Yield: 11.20%

Golar LNG

(NASDAQ:

GLNG

) shares currently have a dividend yield of 11.20%.

Golar LNG Limited, a midstream liquefied natural gas (LNG) company, engages in the transportation, regasification, liquefaction, and trading of LNG. The company operates in three segments: Vessel Operations, LNG Trading, and FLNG. The company has a P/E ratio of 10.09.

The average volume for Golar LNG has been 1,910,500 shares per day over the past 30 days. Golar LNG has a market cap of $1.4 billion and is part of the transportation industry. Shares are down 58.2% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Golar LNG

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 feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • Despite the weak revenue results, GLNG has significantly outperformed against the industry average of 36.8%. Since the same quarter one year prior, revenues slightly dropped by 5.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • GLNG's debt-to-equity ratio of 0.91 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 55.49%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1966.66% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The gross profit margin for GOLAR LNG LTD is currently extremely low, coming in at 5.39%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -533.72% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$15.38 million or 181.07% 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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