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: 9.20%

FS Investment

(NYSE:

FSIC

) shares currently have a dividend yield of 9.20%.

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 9.52.

The average volume for FS Investment has been 710,900 shares per day over the past 30 days. FS Investment has a market cap of $2.4 billion and is part of the financial services industry. Shares are down 3.1% year-to-date as of the close of trading on Wednesday.

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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 feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow.

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.
  • 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.
  • 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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Martin Midstream Partners

Dividend Yield: 16.10%

Martin Midstream Partners

(NASDAQ:

MMLP

) shares currently have a dividend yield of 16.10%.

Martin Midstream Partners L.P. collects, transports, stores, and markets petroleum products and by-products in the United States Gulf Coast region. The company has a P/E ratio of 29.29.

The average volume for Martin Midstream Partners has been 148,100 shares per day over the past 30 days. Martin Midstream Partners has a market cap of $716.6 million and is part of the energy industry. Shares are down 19.8% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

TheStreet Recommends

Martin Midstream Partners

as a

hold

. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • MARTIN MIDSTREAM PARTNERS LP 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, MARTIN MIDSTREAM PARTNERS LP continued to lose money by earning -$0.15 versus -$0.49 in the prior year. This year, the market expects an improvement in earnings ($0.92 versus -$0.15).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 112.4% when compared to the same quarter one year prior, rising from -$26.91 million to $3.33 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, MARTIN MIDSTREAM PARTNERS LP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Net operating cash flow has significantly decreased to $8.90 million or 72.23% 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.
  • The debt-to-equity ratio is very high at 2.09 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, MMLP maintains a poor quick ratio of 0.75, which illustrates the inability to avoid short-term cash problems.

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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 19.18.

The average volume for Garrison Capital has been 41,700 shares per day over the past 30 days. Garrison Capital has a market cap of $234.6 million and is part of the financial services industry. Shares are down 5.5% year-to-date as of the close of trading on Wednesday.

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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 a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • GARS's revenue growth has slightly outpaced the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 2.0%. 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 currently very high, coming in at 76.63%. 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 -1.82% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 211.88% to $39.18 million when compared to the same quarter last year. Despite an increase in cash flow of 211.88%, GARRISON CAPITAL INC is still growing at a significantly lower rate than the industry average of 275.70%.
  • 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.
  • The share price of GARRISON CAPITAL INC has not done very well: it is down 6.38% 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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