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."

Fifth Street Senior Floating Rate

Dividend Yield: 10.30%

Fifth Street Senior Floating Rate

(NASDAQ:

FSFR

) shares currently have a dividend yield of 10.30%.

Fifth Street Senior Floating Rate Corp. was incorporated in 2013 and is based in White Plains, New York. The company has a P/E ratio of 8.73.

The average volume for Fifth Street Senior Floating Rate has been 183,900 shares per day over the past 30 days. Fifth Street Senior Floating Rate has a market cap of $257.2 million and is part of the financial services industry. Shares are down 13% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Fifth Street Senior Floating Rate

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth 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 weak operating cash flow.

Highlights from the ratings report include:

  • FSFR's very impressive revenue growth greatly exceeded the industry average of 6.9%. Since the same quarter one year prior, revenues leaped by 256.4%. 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 FIFTH STREET SR FLTG RATE CP is currently very high, coming in at 76.62%. It has increased significantly from the same period last year. Along with this, the net profit margin of 15.61% is above that of the industry average.
  • When compared to other companies in the Capital Markets industry and the overall market, FIFTH STREET SR FLTG RATE CP's return on equity is below that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 26.96%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 74.07% compared to the year-earlier 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.
  • Net operating cash flow has significantly decreased to -$15.47 million or 157.90% when compared to the same quarter last year. Despite a decrease in cash flow of 157.90%, FIFTH STREET SR FLTG RATE CP is still significantly exceeding the industry average of -433.20%.

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Garrison Capital

Dividend Yield: 10.00%

Garrison Capital

(NASDAQ:

GARS

) shares currently have a dividend yield of 10.00%.

Garrison Capital Inc. is a business development company specializing in investments primarily in the debt and equity of middle market companies. The company has a P/E ratio of 6.44.

The average volume for Garrison Capital has been 44,700 shares per day over the past 30 days. Garrison Capital has a market cap of $235.5 million and is part of the financial services industry. Shares are down 1.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Garrison Capital

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity 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 6.9%. Since the same quarter one year prior, revenues slightly increased by 2.4%. 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 GARRISON CAPITAL INC is rather high; currently it is at 68.38%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 29.47% significantly outperformed against the industry average.
  • After a year of stock price fluctuations, the net result is that GARS's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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 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 57.2% when compared to the same quarter one year ago, falling from $9.06 million to $3.88 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. When compared to other companies in the Capital Markets industry and the overall market, GARRISON CAPITAL INC's return on equity is below that of both the industry average and the S&P 500.

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Terra Nitrogen

Dividend Yield: 9.10%

Terra Nitrogen

(NYSE:

TNH

) shares currently have a dividend yield of 9.10%.

Terra Nitrogen Company, L.P. produces nitrogen fertilizer products in the United States. It primarily offers anhydrous ammonia and urea ammonium nitrate solutions for farmers to improve the yield and quality of their crops. Terra Nitrogen GP Inc. serves as the general partner of the company. The company has a P/E ratio of 9.46.

The average volume for Terra Nitrogen has been 20,800 shares per day over the past 30 days. Terra Nitrogen has a market cap of $1.9 billion and is part of the chemicals industry. Shares are up 1.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Terra Nitrogen

as a

hold

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

Highlights from the ratings report include:

  • TNH has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.06, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for TERRA NITROGEN CO -LP is currently very high, coming in at 74.09%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 64.64% significantly outperformed against the industry average.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.6%. Since the same quarter one year prior, revenues slightly dropped by 8.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • TNH'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 29.34%, 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.
  • Net operating cash flow has decreased to $92.00 million or 14.81% 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.

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