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."

Air Industries Group

Dividend Yield: 7.60%

Air Industries Group

(AMEX:

AIRI

) shares currently have a dividend yield of 7.60%.

Air Industries Group, an aerospace and defense company, designs and manufactures structural parts and assemblies that focus on flight safety. The company operates through Complex Machining, Aero structures and Electronics, and Turbine Engine Components segments.

The average volume for Air Industries Group has been 5,000 shares per day over the past 30 days. Air Industries Group has a market cap of $59.8 million and is part of the aerospace/defense industry. Shares are down 25.9% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Air Industries Group

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 1.7%. Since the same quarter one year prior, revenues rose by 39.1%. 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 increased to -$1.23 million or 47.10% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 20.70%.
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Aerospace & Defense industry average. The net income has decreased by 11.3% when compared to the same quarter one year ago, dropping from $0.38 million to $0.34 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 Aerospace & Defense industry and the overall market, AIR INDUSTRIES GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for AIR INDUSTRIES GROUP INC is currently lower than what is desirable, coming in at 26.25%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.59% trails that of the industry average.

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Stonemor Partners

Dividend Yield: 9.80%

Stonemor Partners

(NYSE:

STON

) shares currently have a dividend yield of 9.80%.

StoneMor Partners L.P., together with its subsidiaries, owns and operates cemeteries in the United States. It operates through Cemetery Operations-Southeast, Cemetery Operations-Northeast, Cemetery Operations-West, and Funeral Homes segments.

The average volume for Stonemor Partners has been 138,000 shares per day over the past 30 days. Stonemor Partners has a market cap of $859.3 million and is part of the diversified services industry. Shares are up 5.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Stonemor Partners

as a

hold

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

Highlights from the ratings report include:

  • STON's revenue growth trails the industry average of 13.3%. Since the same quarter one year prior, revenues slightly increased by 2.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • The gross profit margin for STONEMOR PARTNERS LP is rather high; currently it is at 51.49%. It has increased from the same quarter the previous year.
  • 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.
  • Net operating cash flow has significantly decreased to $8.06 million or 51.14% when compared to the same quarter last year. Despite a decrease in cash flow of 51.14%, STONEMOR PARTNERS LP is in line with the industry average cash flow growth rate of -53.21%.
  • 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 Diversified Consumer Services industry and the overall market, STONEMOR PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.

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Rose Rock Midstream

Dividend Yield: 16.50%

Rose Rock Midstream

(NYSE:

RRMS

) shares currently have a dividend yield of 16.50%.

Rose Rock Midstream, L.P. owns, operates, develops, and acquires a portfolio of midstream energy assets. The company gathers, transports, stores, distributes, and markets crude oil in Colorado, Kansas, Louisiana, Montana, New Mexico, North Dakota, Ohio, Oklahoma, Texas, and Wyoming. The company has a P/E ratio of 11.10.

The average volume for Rose Rock Midstream has been 207,700 shares per day over the past 30 days. Rose Rock Midstream has a market cap of $588.0 million and is part of the energy industry. Shares are down 66.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Rose Rock Midstream

as a

hold

. The company's strengths can be seen in multiple areas, such as its notable return on equity, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ROSE ROCK MIDSTREAM LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 36.8%. Since the same quarter one year prior, revenues fell by 36.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 62.78%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 34.09% compared to the year-earlier 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.
  • ROSE ROCK MIDSTREAM LP's earnings per share declined by 34.1% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, ROSE ROCK MIDSTREAM LP reported lower earnings of $1.52 versus $1.70 in the prior year. For the next year, the market is expecting a contraction of 15.8% in earnings ($1.28 versus $1.52).

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