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 or Stephanie Link.

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."

Education Realty

Dividend Yield: 4.30%

Education Realty

(NYSE:

EDR

) shares currently have a dividend yield of 4.30%.

EdR is a real estate investment trust. The firm invests in the real estate markets of United States. It invests collegiate housing communities. The firm develops, acquires, owns, and manages collegiate housing communities located near university campuses. The company has a P/E ratio of 50.59.

The average volume for Education Realty has been 1,421,700 shares per day over the past 30 days. Education Realty has a market cap of $1.6 billion and is part of the real estate industry. Shares are up 27.8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Education Realty

as a

hold

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

  • The revenue growth greatly exceeded the industry average of 8.9%. Since the same quarter one year prior, revenues rose by 47.0%. 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. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • The gross profit margin for EDUCATION REALTY TRUST INC is rather low; currently it is at 17.28%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, EDR's net profit margin of 33.44% significantly outperformed against the industry.
  • EDUCATION REALTY TRUST 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, EDUCATION REALTY TRUST INC turned its bottom line around by earning $0.06 versus -$0.01 in the prior year. For the next year, the market is expecting a contraction of 33.3% in earnings ($0.04 versus $0.06).
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, EDUCATION REALTY TRUST INC underperformed against that of the industry average and is significantly less than that of the S&P 500.

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Spirit Realty Capital

Dividend Yield: 5.70%

Spirit Realty Capital

(NYSE:

SRC

) shares currently have a dividend yield of 5.70%.

Spirit Realty Capital, Inc is a publicly traded real estate investment trust.

The average volume for Spirit Realty Capital has been 3,688,900 shares per day over the past 30 days. Spirit Realty Capital has a market cap of $4.6 billion and is part of the real estate industry. Shares are up 18.3% year-to-date as of the close of trading on Tuesday.

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TheStreet Recommends

TheStreet Ratings rates

Spirit Realty Capital

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and poor profit margins.

Highlights from the ratings report include:

  • SRC's very impressive revenue growth greatly exceeded the industry average of 12.2%. Since the same quarter one year prior, revenues leaped by 109.6%. 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.
  • 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, despite the company's weak earnings 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.
  • The gross profit margin for SPIRIT REALTY CAPITAL INC is currently lower than what is desirable, coming in at 29.61%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -59.17% is significantly below that of the industry average.
  • 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 669.7% when compared to the same quarter one year ago, falling from -$11.67 million to -$89.82 million.

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Altisource Residential Corporation

Dividend Yield: 10.00%

Altisource Residential Corporation

(NYSE:

RESI

) shares currently have a dividend yield of 10.00%.

Altisource Residential Corporation, through its wholly-owned subsidiary, Altisource Residential, L.P., focuses on acquiring, owning, and managing single-family rental properties in the United States. The company has a P/E ratio of 6.67.

The average volume for Altisource Residential Corporation has been 505,400 shares per day over the past 30 days. Altisource Residential Corporation has a market cap of $1.3 billion and is part of the real estate industry. Shares are down 25.5% year-to-date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreet Ratings rates

Altisource Residential Corporation

as a

hold

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

Highlights from the ratings report include:

  • RESI's very impressive revenue growth greatly exceeded the industry average of 12.2%. Since the same quarter one year prior, revenues leaped by 1206.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, ALTISOURCE RESIDENTIAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • The gross profit margin for ALTISOURCE RESIDENTIAL CORP is rather high; currently it is at 62.57%. Regardless of RESI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, RESI's net profit margin of 58.41% significantly outperformed against the industry.
  • RESI has underperformed the S&P 500 Index, declining 15.09% 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.
  • Net operating cash flow has significantly decreased to -$20.98 million or 547.23% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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