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 Senior Capital

Dividend Yield: 10.00%

Solar Senior Capital

(NASDAQ:

SUNS

) shares currently have a dividend yield of 10.00%.

Solar Senior Capital Ltd. is a business development company specializing in investments in leveraged, middle-market companies in the United States. The fund invests in the form of senior secured loans, including first lien, unitranche, and second lien debt instruments. The company has a P/E ratio of 13.91.

The average volume for Solar Senior Capital has been 28,400 shares per day over the past 30 days. Solar Senior Capital has a market cap of $162.2 million and is part of the financial services industry. Shares are down 2.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Solar Senior Capital

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, 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:

  • SUNS's revenue growth has slightly outpaced the industry average of 1.9%. Since the same quarter one year prior, revenues slightly increased by 3.6%. 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.
  • Net operating cash flow has significantly increased by 143.18% to $53.18 million when compared to the same quarter last year. Despite an increase in cash flow, SOLAR SENIOR CAPITAL LTD's average is still marginally south of the industry average growth rate of 149.14%.
  • The gross profit margin for SOLAR SENIOR CAPITAL LTD is currently very high, coming in at 79.63%. Regardless of SUNS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SUNS's net profit margin of -72.45% significantly underperformed when compared to the industry average.
  • 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 Capital Markets industry and the overall market, SOLAR SENIOR CAPITAL LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of SOLAR SENIOR CAPITAL LTD has not done very well: it is down 14.01% 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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Ferrellgas Partners

Dividend Yield: 12.10%

Ferrellgas Partners

(NYSE:

FGP

) shares currently have a dividend yield of 12.10%.

Ferrellgas Partners, L.P. distributes and sells propane and related equipment and supplies primarily in the United States. The company transports propane to propane distribution locations, tanks on customers' premises, or to portable propane tanks delivered to retailers.

The average volume for Ferrellgas Partners has been 382,400 shares per day over the past 30 days. Ferrellgas Partners has a market cap of $1.7 billion and is part of the energy industry. Shares are up 2.8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Ferrellgas Partners

as a

hold

. Among the primary strengths of the company is its respectable return on equity which we feel is likely to continue. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk.

Highlights from the ratings report include:

  • Compared to other companies in the Gas Utilities industry and the overall market, FERRELLGAS PARTNERS -LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite the weak revenue results, FGP has outperformed against the industry average of 24.2%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for FERRELLGAS PARTNERS -LP is rather low; currently it is at 23.75%. Regardless of FGP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.79% trails the industry average.
  • The debt-to-equity ratio is very high at 40.60 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, FGP has a quick ratio of 0.56, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly decreased to $13.18 million or 60.20% 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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Hercules Capital

Dividend Yield: 10.50%

Hercules Capital

(NYSE:

HTGC

) shares currently have a dividend yield of 10.50%.

Hercules Technology Growth Capital, Inc. The company has a P/E ratio of 9.64.

The average volume for Hercules Capital has been 330,100 shares per day over the past 30 days. Hercules Capital has a market cap of $860.0 million and is part of the real estate industry. Shares are down 1.9% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Hercules Capital

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. However, as a counter to these strengths, 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:

  • HTGC's revenue growth has slightly outpaced the industry average of 1.9%. Since the same quarter one year prior, revenues slightly increased by 6.8%. 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 HERCULES CAPITAL INC is currently very high, coming in at 86.55%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 35.98% significantly outperformed against the industry average.
  • HERCULES CAPITAL INC's earnings per share declined by 37.5% 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, HERCULES CAPITAL INC reported lower earnings of $0.61 versus $1.10 in the prior year. This year, the market expects an improvement in earnings ($1.24 versus $0.61).
  • Net operating cash flow has significantly decreased to -$35.85 million or 572.87% 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 HERCULES CAPITAL INC has not done very well: it is down 13.27% 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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