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."

DineEquity

Dividend Yield: 4.20%

DineEquity

(NYSE:

DIN

) shares currently have a dividend yield of 4.20%.

DineEquity, Inc., together with its subsidiaries, owns, franchises, and operates full-service restaurants in the United States and internationally. The company has a P/E ratio of 32.14.

The average volume for DineEquity has been 170,700 shares per day over the past 30 days. DineEquity has a market cap of $1.6 billion and is part of the leisure industry. Shares are down 16% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

DineEquity

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:

  • DIN's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 6.9%. 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 Hotels, Restaurants & Leisure industry. The net income increased by 40.3% when compared to the same quarter one year prior, rising from $19.17 million to $26.90 million.
  • DINEEQUITY INC has improved earnings per share by 40.0% in the most recent quarter compared to the same quarter a year ago. 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, DINEEQUITY INC reported lower earnings of $1.89 versus $3.71 in the prior year. This year, the market expects an improvement in earnings ($5.87 versus $1.89).
  • The debt-to-equity ratio is very high at 5.16 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, DIN's quick ratio is somewhat strong at 1.08, demonstrating the ability to handle short-term liquidity needs.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market on the basis of return on equity, DINEEQUITY INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

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Regal Entertainment Group

Dividend Yield: 4.60%

Regal Entertainment Group

(NYSE:

RGC

) shares currently have a dividend yield of 4.60%.

Regal Entertainment Group, through its subsidiaries, operates as a motion picture exhibitor in the United States. It develops, acquires, and operates multi-screen theatres primarily in mid-sized metropolitan markets and suburban growth areas of larger metropolitan markets. The company has a P/E ratio of 19.79.

The average volume for Regal Entertainment Group has been 1,135,700 shares per day over the past 30 days. Regal Entertainment Group has a market cap of $2.5 billion and is part of the media industry. Shares are down 11.1% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Regal Entertainment Group

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins.

Highlights from the ratings report include:

  • RGC's revenue growth has slightly outpaced the industry average of 6.8%. Since the same quarter one year prior, revenues rose by 12.0%. 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 Media industry. The net income increased by 58.0% when compared to the same quarter one year prior, rising from $33.80 million to $53.40 million.
  • REGAL ENTERTAINMENT GROUP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. 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, REGAL ENTERTAINMENT GROUP reported lower earnings of $0.68 versus $1.00 in the prior year. This year, the market expects an improvement in earnings ($1.06 versus $0.68).
  • The gross profit margin for REGAL ENTERTAINMENT GROUP is rather low; currently it is at 22.30%. Regardless of RGC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.18% trails the industry average.
  • In its most recent trading session, RGC 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. 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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Lexmark International

Dividend Yield: 4.10%

Lexmark International

(NYSE:

LXK

) shares currently have a dividend yield of 4.10%.

Lexmark International, Inc., together with its subsidiaries, operates as a developer, manufacturer, and supplier of printing, imaging, device management, managed print services (MPS), document workflow, and business process and content management solutions worldwide.

The average volume for Lexmark International has been 830,800 shares per day over the past 30 days. Lexmark International has a market cap of $2.2 billion and is part of the computer hardware industry. Shares are down 14.6% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Lexmark International

as a

hold

. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • 48.89% is the gross profit margin for LEXMARK INTL INC which we consider to be strong. 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 -4.06% is in-line with the industry average.
  • The revenue fell significantly faster than the industry average of 37.5%. Since the same quarter one year prior, revenues slightly dropped by 0.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • LEXMARK INTL INC 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, LEXMARK INTL INC reported lower earnings of $1.23 versus $4.10 in the prior year. This year, the market expects an improvement in earnings ($3.57 versus $1.23).
  • 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 Computers & Peripherals industry and the overall market, LEXMARK INTL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 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 Computers & Peripherals industry. The net income has significantly decreased by 196.5% when compared to the same quarter one year ago, falling from $37.50 million to -$36.20 million.

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