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."

FS Investment

Dividend Yield: 10.80%

FS Investment

(NYSE:

FSIC

) shares currently have a dividend yield of 10.80%.

FS Investment Corporation is a business development company specializing in investments in debt securities. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments. The company has a P/E ratio of 8.11.

The average volume for FS Investment has been 920,800 shares per day over the past 30 days. FS Investment has a market cap of $2.0 billion and is part of the financial services industry. Shares are down 9.8% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

FS Investment

as a

hold

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

Highlights from the ratings report include:

  • The gross profit margin for FS INVESTMENT CORP is currently very high, coming in at 80.18%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -5.09% is in-line with the industry average.
  • When compared to other companies in the Capital Markets industry and the overall market, FS INVESTMENT CORP's return on equity is below that of both the industry average and the S&P 500.
  • FSIC, with its decline in revenue, slightly underperformed the industry average of 5.5%. Since the same quarter one year prior, revenues fell by 10.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 109.5% when compared to the same quarter one year ago, falling from $55.60 million to -$5.28 million.
  • Net operating cash flow has significantly decreased to -$151.80 million or 1496.60% 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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Investors Real Estate

Dividend Yield: 8.00%

Investors Real Estate

(NYSE:

IRET

) shares currently have a dividend yield of 8.00%.

Investors Real Estate Trust is a real estate investment trust. The trust invests in real estate markets of United States. It is primarily engaged in investment and operation of the the real estate assets. The company has a P/E ratio of 46.71.

The average volume for Investors Real Estate has been 601,700 shares per day over the past 30 days. Investors Real Estate has a market cap of $800.7 million and is part of the real estate industry. Shares are down 6.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

TheStreet Recommends

Investors Real Estate

as a

hold

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

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 225.9% when compared to the same quarter one year prior, rising from $5.11 million to $16.67 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 2.1%. 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.
  • INVESTORS REAL ESTATE TRUST 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. 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, INVESTORS REAL ESTATE TRUST turned its bottom line around by earning $0.11 versus -$0.28 in the prior year. This year, the market expects an improvement in earnings ($0.16 versus $0.11).
  • Net operating cash flow has significantly decreased to $9.54 million or 66.93% 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 INVESTORS REAL ESTATE TRUST has not done very well: it is down 21.38% 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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OneBeacon Insurance Group

Dividend Yield: 7.10%

OneBeacon Insurance Group

(NYSE:

OB

) shares currently have a dividend yield of 7.10%.

OneBeacon Insurance Group, Ltd., through its subsidiaries, provides specialty property and casualty insurance products and services.

The average volume for OneBeacon Insurance Group has been 85,100 shares per day over the past 30 days. OneBeacon Insurance Group has a market cap of $276.7 million and is part of the insurance industry. Shares are down 2.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

OneBeacon Insurance Group

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 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:

  • Although OB's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average.
  • Net operating cash flow has slightly increased to $83.90 million or 4.22% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -13.67%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 15.7%. Since the same quarter one year prior, revenues fell by 11.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 Insurance industry. The net income has significantly decreased by 930.8% when compared to the same quarter one year ago, falling from -$1.30 million to -$13.40 million.
  • 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 Insurance industry and the overall market, ONEBEACON INSURANCE GROUP's return on equity significantly trails that of both the industry average and the S&P 500.

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