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."

Arbor Realty

Dividend Yield: 8.30%

Arbor Realty

(NYSE:

ABR

) shares currently have a dividend yield of 8.30%.

Arbor Realty Trust, Inc., a specialized real estate finance company, invests in various structured finance investments. The company has a P/E ratio of 8.03.

The average volume for Arbor Realty has been 112,700 shares per day over the past 30 days. Arbor Realty has a market cap of $368.5 million and is part of the real estate industry. Shares are up 5.2% year-to-date as of the close of trading on Wednesday.

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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, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity 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 6.1%. Since the same quarter one year prior, revenues slightly increased by 2.8%. 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.
  • After a year of stock price fluctuations, the net result is that ABR's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • 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 73.6% when compared to the same quarter one year ago, falling from $65.29 million to $17.23 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, ARBOR REALTY TRUST INC's return on equity is below that of both the industry average and the S&P 500.

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Terra Nitrogen

Dividend Yield: 11.00%

Terra Nitrogen

(NYSE:

TNH

) shares currently have a dividend yield of 11.00%.

Terra Nitrogen Company, L.P. produces nitrogen fertilizer products in the United States. It primarily offers anhydrous ammonia and urea ammonium nitrate solutions for farmers to improve the yield and quality of their crops. Terra Nitrogen GP Inc. serves as the general partner of the company. The company has a P/E ratio of 9.63.

The average volume for Terra Nitrogen has been 18,000 shares per day over the past 30 days. Terra Nitrogen has a market cap of $1.9 billion and is part of the chemicals industry. Shares are down 0.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Terra Nitrogen

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 18.1%. Since the same quarter one year prior, revenues rose by 11.2%. 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.
  • TNH has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.03, which clearly demonstrates the ability to cover short-term cash needs.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and the Chemicals industry average. The net income has decreased by 3.6% when compared to the same quarter one year ago, dropping from $72.00 million to $69.40 million.
  • TERRA NITROGEN CO -LP's earnings per share declined by 14.2% 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. During the past fiscal year, TERRA NITROGEN CO -LP reported lower earnings of $12.07 versus $15.77 in the prior year.

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Alliance Holdings GP

Dividend Yield: 19.60%

Alliance Holdings GP

(NASDAQ:

AHGP

) shares currently have a dividend yield of 19.60%.

Alliance Holdings GP, L.P., through its subsidiaries, produces and markets coal primarily to utilities and industrial users in the United States. It produces a range of steam coal with varying sulfur and heat contents. The company has a P/E ratio of 3.90.

The average volume for Alliance Holdings GP has been 109,800 shares per day over the past 30 days. Alliance Holdings GP has a market cap of $1.2 billion and is part of the metals & mining industry. Shares are down 66.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Alliance Holdings GP

as a

hold

. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • 37.03% is the gross profit margin for ALLIANCE HOLDINGS GP LP which we consider to be strong. Regardless of AHGP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AHGP's net profit margin of 9.90% compares favorably to the industry average.
  • Net operating cash flow has declined marginally to $189.48 million or 7.33% when compared to the same quarter last year. Despite a decrease in cash flow ALLIANCE HOLDINGS GP LP is still fairing well by exceeding its industry average cash flow growth rate of -26.70%.
  • Currently the debt-to-equity ratio of 1.67 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, AHGP has a quick ratio of 0.60, this demonstrates the lack of ability of the company to cover short-term liquidity needs.

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