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: 5.10%

Staples

(NASDAQ:

SPLS

) shares currently have a dividend yield of 5.10%.

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 189.60.

The average volume for Staples has been 10,329,200 shares per day over the past 30 days. Staples has a market cap of $6.1 billion and is part of the specialty retail industry. Shares are down 48% year-to-date as of the close of trading on Friday.

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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 4.3%. 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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Stage Stores

Dividend Yield: 7.00%

Stage Stores

(NYSE:

SSI

) shares currently have a dividend yield of 7.00%.

Stage Stores, Inc. operates as a specialty department store retailer in small and mid-sized towns and communities in the United States. Its merchandise portfolio comprises moderately priced brand name and private label apparel, accessories, cosmetics, footwear, and home goods. The company has a P/E ratio of 10.28.

The average volume for Stage Stores has been 991,700 shares per day over the past 30 days. Stage Stores has a market cap of $260.7 million and is part of the retail industry. Shares are down 59.7% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Stage Stores

as a

hold

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures 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 weak operating cash flow.

Highlights from the ratings report include:

  • The current debt-to-equity ratio, 0.39, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.08 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • SSI, with its decline in revenue, slightly underperformed the industry average of 4.3%. Since the same quarter one year prior, revenues slightly dropped by 3.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for STAGE STORES INC is currently lower than what is desirable, coming in at 26.48%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.89% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$43.94 million or 1820.36% 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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Enterprise Products Partners

Dividend Yield: 6.70%

Enterprise Products Partners

(NYSE:

EPD

) shares currently have a dividend yield of 6.70%.

Enterprise Products Partners L.P. provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products in the United States and internationally. The company has a P/E ratio of 18.35.

The average volume for Enterprise Products Partners has been 6,105,000 shares per day over the past 30 days. Enterprise Products Partners has a market cap of $46.4 billion and is part of the energy industry. Shares are down 35.1% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Enterprise Products Partners

as a

hold

. Among the primary strengths of the company is its reasonable valuation levels, considering its current price compared to earnings, book value and other measures. At the same time, however, we also find weaknesses including generally higher debt management risk, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • EPD, with its decline in revenue, underperformed when compared the industry average of 36.9%. Since the same quarter one year prior, revenues fell by 48.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Looking at the price performance of EPD's shares over the past 12 months, there is not much good news to report: the stock is down 33.78%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The debt-to-equity ratio of 1.11 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.43, which clearly demonstrates the inability to cover short-term cash needs.

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