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."

BG Staffing

Dividend Yield: 7.80%

BG Staffing

(AMEX:

BGSF

) shares currently have a dividend yield of 7.80%.

BG Staffing, Inc. operates as a temporary staffing company in the United States. It operates through three segments: Light Industrial, Multifamily, and IT Staffing. The company has a P/E ratio of 17.47.

The average volume for BG Staffing has been 3,200 shares per day over the past 30 days. BG Staffing has a market cap of $94.2 million and is part of the diversified services industry. Shares are down 13.6% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

BG Staffing

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and solid stock price performance. 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:

  • BGSF's very impressive revenue growth greatly exceeded the industry average of 3.5%. Since the same quarter one year prior, revenues leaped by 55.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Professional Services industry. The net income increased by 206.7% when compared to the same quarter one year prior, rising from $0.49 million to $1.50 million.
  • Compared to where it was trading a year ago, BGSF's share price has not changed very much due to (a) the relatively weak year-over-year performance of the overall market, (b) the company's stagnant earnings, and (c) other mixed 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.
  • BG STAFFING 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, BG STAFFING INC turned its bottom line around by earning $0.71 versus -$0.09 in the prior year. For the next year, the market is expecting a contraction of 6.3% in earnings ($0.67 versus $0.71).

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AllianceBernstein

Dividend Yield: 9.10%

AllianceBernstein

(NYSE:

AB

) shares currently have a dividend yield of 9.10%.

AllianceBernstein Holding L.P. is publicly owned investment manager. The firm also provides research services to its clients. The company has a P/E ratio of 10.35.

The average volume for AllianceBernstein has been 320,100 shares per day over the past 30 days. AllianceBernstein has a market cap of $2.2 billion and is part of the financial services industry. Shares are down 7.8% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

AllianceBernstein

as a

hold

. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. 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 feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • The gross profit margin for ALLIANCEBERNSTEIN HOLDING LP is currently very high, coming in at 100.00%. AB has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, AB's net profit margin of 89.90% significantly outperformed against the industry.
  • 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. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, ALLIANCEBERNSTEIN HOLDING LP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • AB, with its decline in revenue, slightly underperformed the industry average of 4.5%. Since the same quarter one year prior, revenues slightly dropped by 9.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Looking at the price performance of AB's shares over the past 12 months, there is not much good news to report: the stock is down 26.33%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier 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 declined marginally to $43.00 million or 0.55% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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Horizon Technology Finance

Dividend Yield: 11.90%

Horizon Technology Finance

(NASDAQ:

HRZN

) shares currently have a dividend yield of 11.90%.

Horizon Technology Finance Corporation, a specialty finance company, lends to and invests in development-stage companies in the United States. The company has a P/E ratio of 35.09.

The average volume for Horizon Technology Finance has been 71,300 shares per day over the past 30 days. Horizon Technology Finance has a market cap of $133.6 million and is part of the financial services industry. Shares are up 0.8% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Horizon Technology Finance

as a

hold

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

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 4.5%. Since the same quarter one year prior, revenues slightly increased by 8.9%. 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 gross profit margin for HORIZON TECHNOLOGY FINANCE is rather high; currently it is at 65.30%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 41.97% significantly outperformed against the industry average.
  • The share price of HORIZON TECHNOLOGY FINANCE has not done very well: it is down 20.35% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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 significantly decreased to -$4.94 million or 115.52% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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