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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."

Arlington Asset Investment

Dividend Yield: 15.50%

Arlington Asset Investment

(NYSE:

AI

) shares currently have a dividend yield of 15.50%.

Arlington Asset Investment Corp., an investment firm, acquires mortgage-related and other assets.

The average volume for Arlington Asset Investment has been 312,600 shares per day over the past 30 days. Arlington Asset Investment has a market cap of $368.0 million and is part of the real estate industry. Shares are down 40.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Arlington Asset Investment

TheStreet Recommends

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 108.49% to $23.99 million when compared to the same quarter last year. In addition, ARLINGTON ASSET INVESTMENT has also vastly surpassed the industry average cash flow growth rate of -425.92%.
  • The gross profit margin for ARLINGTON ASSET INVESTMENT is currently very high, coming in at 81.45%. Regardless of AI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AI's net profit margin of 31.95% significantly outperformed against the industry.
  • The revenue fell significantly faster than the industry average of 6.7%. Since the same quarter one year prior, revenues fell by 45.6%. 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 65.0% when compared to the same quarter one year ago, falling from $18.84 million to $6.60 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Capital Markets industry and the overall market, ARLINGTON ASSET INVESTMENT's return on equity significantly trails that of both the industry average and the S&P 500.

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Quad/Graphics

Dividend Yield: 8.80%

Quad/Graphics

(NYSE:

QUAD

) shares currently have a dividend yield of 8.80%.

Quad/Graphics, Inc., together with its subsidiaries, provides print and media solutions in the United States, Europe, and Latin America.

The average volume for Quad/Graphics has been 234,500 shares per day over the past 30 days. Quad/Graphics has a market cap of $482.6 million and is part of the diversified services industry. Shares are down 43% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Quad/Graphics

as a

hold

. Among the primary strengths of the company is its generally strong cash flow from operations. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:

  • Net operating cash flow has increased to $59.20 million or 28.97% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 16.47%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.2%. Since the same quarter one year prior, revenues slightly dropped by 1.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • QUAD/GRAPHICS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, QUAD/GRAPHICS INC reported lower earnings of $0.36 versus $0.60 in the prior year. This year, the market expects an improvement in earnings ($1.12 versus $0.36).
  • The debt-to-equity ratio of 1.44 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, QUAD maintains a poor quick ratio of 0.87, which illustrates the inability to avoid short-term cash problems.
  • 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 Commercial Services & Supplies industry and the overall market, QUAD/GRAPHICS INC's return on equity significantly trails that of both the industry average and the S&P 500.

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OCI Resources

Dividend Yield: 9.70%

OCI Resources

(NYSE:

OCIR

) shares currently have a dividend yield of 9.70%.

OCI Resources LP engages in the trona ore mining and soda ash production businesses in the United States and internationally. It processes trona ore into soda ash, which is a raw material in flat glass, container glass, detergents, chemicals, paper, and other consumer and industrial products. The company has a P/E ratio of 9.26.

The average volume for OCI Resources has been 41,800 shares per day over the past 30 days. OCI Resources has a market cap of $221.1 million and is part of the metals & mining industry. Shares are down 14.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

OCI Resources

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 impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, a generally disappointing performance in the stock itself and poor profit margins.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 11.0%. Since the same quarter one year prior, revenues slightly increased by 8.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.86, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 2.87, which clearly demonstrates the ability to cover short-term cash needs.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to other companies in the Chemicals industry and the overall market on the basis of return on equity, OCI RESOURCES LP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • OCIR has underperformed the S&P 500 Index, declining 6.46% 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.
  • Net operating cash flow has decreased to $26.80 million or 23.20% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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