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: 15.80%

Capitala Finance

(NASDAQ:

CPTA

) shares currently have a dividend yield of 15.80%.

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 65.94.

The average volume for Capitala Finance has been 75,500 shares per day over the past 30 days. Capitala Finance has a market cap of $187.1 million and is part of the financial services industry. Shares are down 33.4% year-to-date as of the close of trading on Wednesday.

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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 robust revenue growth, increase in net income and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity.

Highlights from the ratings report include:

  • CPTA's very impressive revenue growth greatly exceeded the industry average of 5.7%. Since the same quarter one year prior, revenues leaped by 63.9%. 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 Capital Markets industry. The net income increased by 2467.1% when compared to the same quarter one year prior, rising from $0.31 million to $7.96 million.
  • Net operating cash flow has increased to -$29.14 million or 44.66% when compared to the same quarter last year. Despite an increase in cash flow of 44.66%, CAPITALA FINANCE CORP is still growing at a significantly lower rate than the industry average of 272.65%.
  • CPTA'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 33.36%, 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. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • 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. When compared to other companies in the Capital Markets industry and the overall market, CAPITALA FINANCE CORP's return on equity is below that of both the industry average and the S&P 500.

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Seaspan

Dividend Yield: 9.80%

Seaspan

(NYSE:

SSW

) shares currently have a dividend yield of 9.80%.

Seaspan Corporation operates as an independent charter owner and manager of containerships in Hong Kong. The company charters its containerships pursuant to long-term, fixed-rate time charters to various container liner companies. The company has a P/E ratio of 3.79.

The average volume for Seaspan has been 279,700 shares per day over the past 30 days. Seaspan has a market cap of $1.5 billion and is part of the transportation industry. Shares are down 14.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Seaspan

as a

hold

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

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 16.2%. Since the same quarter one year prior, revenues rose by 14.5%. 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 SEASPAN CORP is currently very high, coming in at 70.44%. Regardless of SSW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.62% trails the industry average.
  • SEASPAN CORP 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. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SEASPAN CORP reported lower earnings of $0.78 versus $2.94 in the prior year. This year, the market expects an improvement in earnings ($1.07 versus $0.78).
  • Net operating cash flow has declined marginally to $82.87 million or 4.19% 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 share price of SEASPAN CORP has not done very well: it is down 17.34% 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. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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Martin Midstream Partners

Dividend Yield: 15.60%

Martin Midstream Partners

(NASDAQ:

MMLP

) shares currently have a dividend yield of 15.60%.

Martin Midstream Partners L.P. collects, transports, stores, and markets petroleum products and by-products in the United States Gulf Coast region. The company has a P/E ratio of 30.19.

The average volume for Martin Midstream Partners has been 182,500 shares per day over the past 30 days. Martin Midstream Partners has a market cap of $738.6 million and is part of the energy industry. Shares are down 22.5% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Martin Midstream Partners

as a

hold

. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • MARTIN MIDSTREAM 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, MARTIN MIDSTREAM PARTNERS LP continued to lose money by earning -$0.15 versus -$0.49 in the prior year. This year, the market expects an improvement in earnings ($0.92 versus -$0.15).
  • 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 112.4% when compared to the same quarter one year prior, rising from -$26.91 million to $3.33 million.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, MARTIN MIDSTREAM PARTNERS LP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Net operating cash flow has significantly decreased to $8.90 million or 72.23% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The debt-to-equity ratio is very high at 2.09 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, MMLP maintains a poor quick ratio of 0.75, which illustrates the inability to avoid short-term cash problems.

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