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."

Franklin Street Properties

Dividend Yield: 7.60%

Franklin Street Properties

(AMEX:

FSP

) shares currently have a dividend yield of 7.60%.

Franklin Street Properties Corp. is a publicly traded hybrid real estate investment trust. The firm invests in the real estate markets of the United States. It primarily engages in property acquisitions and dispositions, short-term financing, leasing, development and asset management. The company has a P/E ratio of 29.26.

The average volume for Franklin Street Properties has been 339,300 shares per day over the past 30 days. Franklin Street Properties has a market cap of $1.0 billion and is part of the real estate industry. Shares are down 1.4% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Franklin Street Properties

as a

hold

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.

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 258.8% when compared to the same quarter one year prior, rising from $4.30 million to $15.41 million.
  • FSP, with its decline in revenue, underperformed when compared the industry average of 7.9%. Since the same quarter one year prior, revenues slightly dropped by 2.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • FSP has underperformed the S&P 500 Index, declining 23.28% 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.
  • The gross profit margin for FRANKLIN STREET PROPERTIES is rather low; currently it is at 21.07%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 25.49% trails that of the industry average.

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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 20.71.

The average volume for Evolving Systems has been 26,500 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 5.6% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Evolving Systems

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, reasonable valuation levels 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:

  • 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. To add to this, EVOL has a quick ratio of 1.84, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has slightly increased to -$0.24 million or 5.42% when compared to the same quarter last year. Despite an increase in cash flow, EVOLVING SYSTEMS INC's cash flow growth rate is still lower than the industry average growth rate of 34.42%.
  • 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 Software industry. The net income has significantly decreased by 66.0% when compared to the same quarter one year ago, falling from $1.68 million to $0.57 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. 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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New Media Investment Group

Dividend Yield: 8.20%

New Media Investment Group

(NYSE:

NEWM

) shares currently have a dividend yield of 8.20%.

New Media Investment Group Inc. owns, operates, and invests in local media assets in the United States.. The company has a P/E ratio of 10.57.

The average volume for New Media Investment Group has been 250,800 shares per day over the past 30 days. New Media Investment Group has a market cap of $722.5 million and is part of the media industry. Shares are down 15.9% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

New Media Investment Group

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. 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:

  • NEWM's very impressive revenue growth greatly exceeded the industry average of 7.8%. Since the same quarter one year prior, revenues leaped by 78.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.55, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, NEWM has a quick ratio of 1.65, which demonstrates the ability of the company to cover short-term liquidity needs.
  • NEW MEDIA INVESTMENT GROUP 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, NEW MEDIA INVESTMENT GROUP turned its bottom line around by earning $1.51 versus -$0.17 in the prior year. For the next year, the market is expecting a contraction of 18.5% in earnings ($1.23 versus $1.51).
  • NEWM'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 35.04%, 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 $10.49 million or 39.93% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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