Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer

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."

Capitala Finance

Dividend Yield: 10.70%

Capitala Finance

(NASDAQ:

CPTA

) shares currently have a dividend yield of 10.70%.

Capitala Finance Corp. is a Business Development Company specializing in investments in traditional mezzanine, senior subordinated and unitranche debt, second-lien loans, equity securities issued by lower and traditional middle-market companies, and small and middle-market companies. The company has a P/E ratio of 15.76.

The average volume for Capitala Finance has been 97,700 shares per day over the past 30 days. Capitala Finance has a market cap of $229.0 million and is part of the financial services industry. Shares are down 1.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Capitala 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 deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • CPTA's revenue growth has slightly outpaced the industry average of 3.5%. Since the same quarter one year prior, revenues rose by 10.8%. 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 CAPITALA FINANCE CORP is currently very high, coming in at 71.12%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -83.05% is in-line with the industry average.
  • Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, CAPITALA FINANCE CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Net operating cash flow has significantly decreased to -$44.53 million or 85.12% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 264.5% when compared to the same quarter one year ago, falling from $6.80 million to -$11.18 million.

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Arbor Realty

Dividend Yield: 7.50%

Arbor Realty

(NYSE:

ABR

) shares currently have a dividend yield of 7.50%.

Arbor Realty Trust, Inc., a specialized real estate finance company, invests in various structured finance investments. The company has a P/E ratio of 4.08.

The average volume for Arbor Realty has been 81,100 shares per day over the past 30 days. Arbor Realty has a market cap of $353.5 million and is part of the real estate industry. Shares are up 2.5% 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 compelling growth in net income, revenue growth 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:

  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 45.2% when compared to the same quarter one year prior, rising from $4.78 million to $6.94 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.1%. Since the same quarter one year prior, revenues slightly increased by 2.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for ARBOR REALTY TRUST INC is rather high; currently it is at 54.88%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, ABR's net profit margin of 21.06% significantly trails the industry average.
  • ARBOR REALTY TRUST INC has improved earnings per share by 42.9% 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ARBOR REALTY TRUST INC increased its bottom line by earning $1.71 versus $0.41 in the prior year. For the next year, the market is expecting a contraction of 71.6% in earnings ($0.49 versus $1.71).
  • In its most recent trading session, ABR has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.

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SunCoke Energy Partners

Dividend Yield: 10.30%

SunCoke Energy Partners

(NYSE:

SXCP

) shares currently have a dividend yield of 10.30%.

SunCoke Energy Partners, L.P., a master limited partnership, manufactures and sells coke used in the blast furnace production of steel in the United States. The company operates through Domestic Coke and Coke Logistics segments. The company has a P/E ratio of 14.03.

The average volume for SunCoke Energy Partners has been 131,700 shares per day over the past 30 days. SunCoke Energy Partners has a market cap of $522.6 million and is part of the metals & mining industry. Shares are down 18.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

SunCoke Energy Partners

as a

hold

. The company's strengths can be seen in multiple areas, such as its increase in net income, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 23.7% when compared to the same quarter one year prior, going from $17.30 million to $21.40 million.
  • Despite the weak revenue results, SXCP has outperformed against the industry average of 18.5%. Since the same quarter one year prior, revenues slightly dropped by 3.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • SUNCOKE ENERGY PARTNERS LP's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SUNCOKE ENERGY PARTNERS LP reported lower earnings of $1.51 versus $1.82 in the prior year. This year, the market expects an improvement in earnings ($1.75 versus $1.51).
  • SXCP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 25.53%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, SUNCOKE ENERGY PARTNERS LP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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