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."

Capital Product Partners

Dividend Yield: 15.20%

Capital Product Partners

(NASDAQ:

CPLP

) shares currently have a dividend yield of 15.20%.

Capital Product Partners L.P., a shipping company, provides marine transportation services in Greece. The company has a P/E ratio of 17.03.

The average volume for Capital Product Partners has been 338,500 shares per day over the past 30 days. Capital Product Partners has a market cap of $748.4 million and is part of the transportation industry. Shares are down 21.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Capital Product Partners

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 36.7%. Since the same quarter one year prior, revenues rose by 19.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant 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 Oil, Gas & Consumable Fuels industry. The net income increased by 22.4% when compared to the same quarter one year prior, going from $11.27 million to $13.79 million.
  • CPLP's debt-to-equity ratio of 0.60 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that CPLP's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.55 is high and demonstrates strong liquidity.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, CAPITAL PRODUCT PARTNERS LP's return on equity is below that of both the industry average and the S&P 500.
  • CPLP has underperformed the S&P 500 Index, declining 24.09% from its price level of one year ago. 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.

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Cross Timbers Royalty

Dividend Yield: 9.90%

Cross Timbers Royalty

(NYSE:

CRT

) shares currently have a dividend yield of 9.90%.

Cross Timbers Royalty Trust operates as an express trust in the United States. The company has a P/E ratio of 5.80.

The average volume for Cross Timbers Royalty has been 21,800 shares per day over the past 30 days. Cross Timbers Royalty has a market cap of $91.7 million and is part of the energy industry. Shares are down 8.9% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Cross Timbers Royalty

as a

hold

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • CRT 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 16.45, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for CROSS TIMBERS ROYALTY TRUST is currently very high, coming in at 100.00%. CRT has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, CRT's net profit margin of 92.92% significantly outperformed against the industry.
  • CROSS TIMBERS ROYALTY TRUST 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. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, CROSS TIMBERS ROYALTY TRUST increased its bottom line by earning $2.67 versus $2.31 in the prior year.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, CROSS TIMBERS ROYALTY TRUST's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 42.06%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 61.84% compared to 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.

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Ares Commercial Real Estate

Dividend Yield: 7.70%

Ares Commercial Real Estate

(NYSE:

ACRE

) shares currently have a dividend yield of 7.70%.

Ares Commercial Real Estate Corporation operates as a specialty finance company. The company operates in two segments, Principal Lending and Mortgage Banking. The company has a P/E ratio of 10.72.

The average volume for Ares Commercial Real Estate has been 140,000 shares per day over the past 30 days. Ares Commercial Real Estate has a market cap of $371.9 million and is part of the real estate industry. Shares are up 11.7% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Ares Commercial Real Estate

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 we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 43.1%. 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.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, ARES COMMERCIAL REAL ESTATE's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$18.42 million or 163.01% 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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