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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."

Medallion Financial

Dividend Yield: 14.30%

Medallion Financial

(NASDAQ:

TAXI

) shares currently have a dividend yield of 14.30%.

Medallion Financial Corp., through its subsidiaries, operates as a specialty finance company in the United States. The company engages in originating, acquiring, and servicing loans that finance taxicab medallions and various types of commercial businesses. The company has a P/E ratio of 6.30.

The average volume for Medallion Financial has been 252,300 shares per day over the past 30 days. Medallion Financial has a market cap of $171.9 million and is part of the financial services industry. Shares are down 30.2% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Medallion Financial

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TheStreet Recommends

as a

hold

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

Highlights from the ratings report include:

  • TAXI's revenue growth has slightly outpaced the industry average of 6.9%. Since the same quarter one year prior, revenues slightly increased by 9.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for MEDALLION FINANCIAL CORP is rather high; currently it is at 61.30%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 73.85% significantly outperformed against the industry average.
  • MEDALLION FINANCIAL CORP has improved earnings per share by 17.9% in the most recent quarter compared to 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, MEDALLION FINANCIAL CORP reported lower earnings of $1.14 versus $1.16 in the prior year. This year, the market expects an improvement in earnings ($1.18 versus $1.14).
  • TAXI's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 44.88%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • Net operating cash flow has decreased to $6.06 million or 22.72% when compared to the same quarter last year. Despite a decrease in cash flow of 22.72%, MEDALLION FINANCIAL CORP is still significantly exceeding the industry average of -432.30%.

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Arbor Realty

Dividend Yield: 9.60%

Arbor Realty

(NYSE:

ABR

) shares currently have a dividend yield of 9.60%.

Arbor Realty Trust, Inc., a specialized real estate finance company, invests in various structured finance investments. The company has a P/E ratio of 3.39.

The average volume for Arbor Realty has been 143,300 shares per day over the past 30 days. Arbor Realty has a market cap of $319.5 million and is part of the real estate industry. Shares are down 7.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Arbor Realty

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.7%. Since the same quarter one year prior, revenues slightly increased by 1.3%. 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's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, ARBOR REALTY TRUST INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, ABR has underperformed the S&P 500 Index, declining 8.93% from its price level of one year ago. 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 compared to the Real Estate Investment Trusts (REITs) industry average, but is greater than that of the S&P 500. The net income has decreased by 7.2% when compared to the same quarter one year ago, dropping from $13.36 million to $12.39 million.

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Manning & Napier

Dividend Yield: 7.50%

Manning & Napier

(NYSE:

MN

) shares currently have a dividend yield of 7.50%.

Manning & Napier, Inc. provides investment management products and services primarily in the United States. The company offers a range of investment solutions through separately managed accounts, mutual funds, and collective investment trust funds. The company has a P/E ratio of 7.89.

The average volume for Manning & Napier has been 148,600 shares per day over the past 30 days. Manning & Napier has a market cap of $125.9 million and is part of the financial services industry. Shares are down 38.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Manning & Napier

as a

hold

. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow.

Highlights from the ratings report include:

  • MANNING & NAPIER INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, MANNING & NAPIER INC increased its bottom line by earning $0.67 versus $0.20 in the prior year. This year, the market expects an improvement in earnings ($1.01 versus $0.67).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 401.1% when compared to the same quarter one year prior, rising from $0.70 million to $3.50 million.
  • 39.55% is the gross profit margin for MANNING & NAPIER INC which we consider to be strong. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, MN's net profit margin of 4.02% significantly trails the industry average.
  • Net operating cash flow has decreased to $44.75 million or 17.80% when compared to the same quarter last year. Despite a decrease in cash flow of 17.80%, MANNING & NAPIER INC is still significantly exceeding the industry average of -432.30%.
  • MN's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 52.08%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.

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