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."

TAL International Group

Dividend Yield: 12.20%

TAL International Group

(NYSE:

TAL

) shares currently have a dividend yield of 12.20%.

TAL International Group, Inc., together with its subsidiaries, leases intermodal transportation equipment and provides maritime container management services worldwide. The company operates in two segments, Equipment Leasing and Equipment Trading. The company has a P/E ratio of 7.08.

The average volume for TAL International Group has been 306,800 shares per day over the past 30 days. TAL International Group has a market cap of $493.9 million and is part of the diversified services industry. Shares are down 2.3% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

TAL International Group

as a

hold

. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations 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 generally higher debt management risk.

Highlights from the ratings report include:

  • Net operating cash flow has slightly increased to $95.54 million or 4.69% when compared to the same quarter last year. In addition, TAL INTERNATIONAL GROUP INC has also modestly surpassed the industry average cash flow growth rate of -2.33%.
  • The gross profit margin for TAL INTERNATIONAL GROUP INC is currently very high, coming in at 81.79%. Regardless of TAL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.00% trails the industry average.
  • The debt-to-equity ratio is very high at 5.04 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • 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. In comparison to the other companies in the Trading Companies & Distributors industry and the overall market, TAL INTERNATIONAL GROUP INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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FS Investment

Dividend Yield: 9.80%

FS Investment

(NYSE:

FSIC

) shares currently have a dividend yield of 9.80%.

FS Investment Corporation is a business development company specializing in investments in debt securities. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments. The company has a P/E ratio of 8.93.

The average volume for FS Investment has been 745,800 shares per day over the past 30 days. FS Investment has a market cap of $2.2 billion and is part of the financial services industry. Shares are up 2.3% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

FS Investment

as a

hold

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

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 425.07% to $121.87 million when compared to the same quarter last year. In addition, FS INVESTMENT CORP has also vastly surpassed the industry average cash flow growth rate of -146.35%.
  • The gross profit margin for FS INVESTMENT CORP is rather high; currently it is at 66.79%. 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 -11.73% is in-line with the industry average.
  • Despite the weak revenue results, FSIC has outperformed against the industry average of 24.3%. Since the same quarter one year prior, revenues slightly dropped by 5.1%. 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 Capital Markets industry. The net income has significantly decreased by 117.2% when compared to the same quarter one year ago, falling from $70.43 million to -$12.10 million.
  • 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 on the basis of return on equity, FS INVESTMENT CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.

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Goldman Sachs BDC

Dividend Yield: 9.00%

Goldman Sachs BDC

(NYSE:

GSBD

) shares currently have a dividend yield of 9.00%.

Goldman Sachs BDC, Inc. is a business development company specializing in middle market and mezzanine investment in private companies.

The average volume for Goldman Sachs BDC has been 96,600 shares per day over the past 30 days. Goldman Sachs BDC has a market cap of $727.0 million and is part of the real estate industry. Shares are up 5.3% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Goldman Sachs BDC

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 24.3%. Since the same quarter one year prior, revenues rose by 18.9%. 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 GOLDMAN SACHS BDC INC is currently very high, coming in at 77.36%. 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 17.23% trails the industry average.
  • When compared to other companies in the Capital Markets industry and the overall market, GOLDMAN SACHS BDC INC's return on equity is below that of both the industry average and the S&P 500.
  • The share price of GOLDMAN SACHS BDC INC has not done very well: it is down 16.31% 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.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Capital Markets industry. The net income has significantly decreased by 61.5% when compared to the same quarter one year ago, falling from $14.03 million to $5.40 million.

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