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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."

Evolving Systems

Dividend Yield: 7.60%

Evolving Systems

(NASDAQ:

EVOL

) shares currently have a dividend yield of 7.60%.

Evolving Systems, Inc. provides software solutions and services to the wireless, wireline, and cable markets in the United Kingdom, Nigeria, Mexico, and internationally. The company has a P/E ratio of 20.57.

The average volume for Evolving Systems has been 24,100 shares per day over the past 30 days. Evolving Systems has a market cap of $67.9 million and is part of the computer software & services industry. Shares are up 4.5% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Evolving Systems

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TheStreet Recommends

as a

hold

. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.89 is somewhat weak and could be cause for future problems.
  • The gross profit margin for EVOLVING SYSTEMS INC is currently very high, coming in at 73.49%. Regardless of EVOL'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 15.35% trails the industry average.
  • Net operating cash flow has significantly decreased to -$0.67 million or 368.05% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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. When compared to other companies in the Software industry and the overall market, EVOLVING SYSTEMS INC's return on equity is below that of both the industry average and the S&P 500.

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Arbor Realty

Dividend Yield: 8.90%

Arbor Realty

(NYSE:

ABR

) shares currently have a dividend yield of 8.90%.

Arbor Realty Trust, Inc., a real estate finance company, invests in a diversified portfolio of structured finance assets in the multifamily and commercial real estate markets. The company has a P/E ratio of 7.51.

The average volume for Arbor Realty has been 95,000 shares per day over the past 30 days. Arbor Realty has a market cap of $344.5 million and is part of the real estate industry. Shares are down 5.9% year-to-date as of the close of trading on Friday.

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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 revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.1%. Since the same quarter one year prior, revenues slightly increased by 1.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • 46.15% is the gross profit margin for ARBOR REALTY TRUST INC which we consider to be strong. Regardless of ABR'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 20.67% trails the industry average.
  • 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, ARBOR REALTY TRUST INC'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 $0.75 million or 87.47% 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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Medley Capital

Dividend Yield: 17.60%

Medley Capital

(NYSE:

MCC

) shares currently have a dividend yield of 17.60%.

Medley Capital Corporation is a business development company. The fund seeks to invest in privately negotiated debt and equity securities of small and middle market companies.

The average volume for Medley Capital has been 364,400 shares per day over the past 30 days. Medley Capital has a market cap of $379.8 million and is part of the financial services industry. Shares are down 8.8% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Medley Capital

as a

hold

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

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 246.80% to $62.18 million when compared to the same quarter last year. In addition, MEDLEY CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of -2.34%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 22.6%. Since the same quarter one year prior, revenues fell by 13.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for MEDLEY CAPITAL CORP is rather high; currently it is at 65.75%. Regardless of MCC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MCC's net profit margin of -113.87% significantly underperformed when compared to 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 Capital Markets industry. The net income has significantly decreased by 114.0% when compared to the same quarter one year ago, falling from -$18.32 million to -$39.20 million.
  • 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 Capital Markets industry and the overall market, MEDLEY CAPITAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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