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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."

Alon USA Partners

Dividend Yield: 17.40%

Alon USA Partners

(NYSE:

ALDW

) shares currently have a dividend yield of 17.40%.

Alon USA Partners, LP refines and markets petroleum products primarily in the South Central and Southwestern regions of the United States. The company owns and operates a crude oil refinery in Big Spring, Texas with crude oil throughput capacity of 73,000 barrels per day. The company has a P/E ratio of 6.93.

The average volume for Alon USA Partners has been 229,200 shares per day over the past 30 days. Alon USA Partners has a market cap of $1.5 billion and is part of the energy industry. Shares are up 87.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Alon USA Partners

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TheStreet Recommends

as a

hold

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:

  • Powered by its strong earnings growth of 691.66% and other important driving factors, this stock has surged by 34.34% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • ALON USA PARTNERS LP 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ALON USA PARTNERS LP increased its bottom line by earning $2.70 versus $2.19 in the prior year. This year, the market expects an improvement in earnings ($2.96 versus $2.70).
  • Despite the weak revenue results, ALDW has outperformed against the industry average of 34.3%. Since the same quarter one year prior, revenues fell by 13.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for ALON USA PARTNERS LP is currently extremely low, coming in at 14.98%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, ALDW's net profit margin of 9.50% compares favorably to the industry average.
  • The debt-to-equity ratio of 1.43 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, ALDW maintains a poor quick ratio of 0.83, which illustrates the inability to avoid short-term cash problems.

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Arbor Realty

Dividend Yield: 9.50%

Arbor Realty

(NYSE:

ABR

) shares currently have a dividend yield of 9.50%.

Arbor Realty Trust, Inc., a specialized real estate finance company, invests in various structured finance investments. The company has a P/E ratio of 3.43.

The average volume for Arbor Realty has been 128,700 shares per day over the past 30 days. Arbor Realty has a market cap of $323.1 million and is part of the real estate industry. Shares are down 6.5% year-to-date as of the close of trading on Thursday.

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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 8.42% 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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Monroe Capital

Dividend Yield: 9.50%

Monroe Capital

(NASDAQ:

MRCC

) shares currently have a dividend yield of 9.50%.

Monroe Capital Corporation is a business development company specializing in senior, unitranche and junior secured debt and, to a lesser extent, unsecured debt and equity investments in middle-market companies. The fund focuses on companies with a maximum of $25 million in EBITDA per year. The company has a P/E ratio of 11.95.

The average volume for Monroe Capital has been 67,400 shares per day over the past 30 days. Monroe Capital has a market cap of $183.0 million and is part of the real estate industry. Shares are up 0.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Monroe Capital

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 6.8%. Since the same quarter one year prior, revenues rose by 35.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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. Although other factors naturally played a role, the company's strong earnings growth was key. 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 increased to -$5.81 million or 34.79% when compared to the same quarter last year. In addition, MONROE CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of -432.89%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Capital Markets industry and the overall market, MONROE CAPITAL CORP's return on equity is below that of both the industry average and the S&P 500.

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