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."

Harte-Hanks

Dividend Yield: 8.10%

Harte-Hanks

(NYSE:

HHS

) shares currently have a dividend yield of 8.10%.

Harte-Hanks, Inc. provides various marketing services in the United States and internationally. The company operates in two segments, Customer Interaction and Trillium Software. The company has a P/E ratio of 19.14.

The average volume for Harte-Hanks has been 221,800 shares per day over the past 30 days. Harte-Hanks has a market cap of $259.7 million and is part of the media industry. Shares are down 47% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Harte-Hanks

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 a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and unimpressive growth in net income.

Highlights from the ratings report include:

  • HHS's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.19, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to $6.60 million or 28.72% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 7.93%.
  • HHS, with its decline in revenue, underperformed when compared the industry average of 6.6%. Since the same quarter one year prior, revenues fell by 12.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • HARTE HANKS INC 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. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, HARTE HANKS INC reported lower earnings of $0.38 versus $0.39 in the prior year. For the next year, the market is expecting a contraction of 18.4% in earnings ($0.31 versus $0.38).
  • 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 Media industry. The net income has significantly decreased by 174.0% when compared to the same quarter one year ago, falling from $5.64 million to -$4.17 million.

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Ellington Financial

Dividend Yield: 14.50%

Ellington Financial

(NYSE:

EFC

) shares currently have a dividend yield of 14.50%.

Ellington Financial LLC, a specialty finance company, acquires and manages mortgage-related assets, including residential mortgage backed securities backed by prime jumbo, Alt-A, manufactured housing and subprime residential mortgage loans, and residential mortgage-backed securities. The company has a P/E ratio of 13.20.

The average volume for Ellington Financial has been 119,100 shares per day over the past 30 days. Ellington Financial has a market cap of $600.4 million and is part of the real estate industry. Shares are down 9% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Ellington Financial

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth and expanding profit margins. 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 disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 6.9%. Since the same quarter one year prior, revenues rose by 27.4%. 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 ELLINGTON FINANCIAL LLC is currently very high, coming in at 76.96%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 49.14% significantly outperformed against the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 25.20%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 51.85% 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.
  • 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 37.2% when compared to the same quarter one year ago, falling from $20.95 million to $13.15 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, ELLINGTON FINANCIAL LLC's return on equity is below that of both the industry average and the S&P 500.

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Global Ship Lease

Dividend Yield: 7.50%

Global Ship Lease

(NYSE:

GSL

) shares currently have a dividend yield of 7.50%.

Global Ship Lease, Inc. owns and charters containerships of various sizes under long-term fixed-rate charters to container shipping companies. As of April 21, 2015, it owned 19 vessels with a total capacity of 82,475 twenty-foot equivalent units. The company has a P/E ratio of 7.81.

The average volume for Global Ship Lease has been 78,100 shares per day over the past 30 days. Global Ship Lease has a market cap of $252.4 million and is part of the transportation industry. Shares are up 13.6% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Global Ship Lease

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and generally higher debt management risk.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 11.7%. Since the same quarter one year prior, revenues rose by 22.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Marine industry. The net income increased by 259.2% when compared to the same quarter one year prior, rising from -$2.29 million to $3.64 million.
  • GLOBAL SHIP LEASE INC reported significant earnings per share improvement in the most recent quarter compared to 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, GLOBAL SHIP LEASE INC reported lower earnings of $0.10 versus $0.68 in the prior year. This year, the market expects an improvement in earnings ($0.21 versus $0.10).
  • The debt-to-equity ratio of 1.03 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, GSL has managed to keep a strong quick ratio of 2.41, which demonstrates the ability to cover short-term cash needs.
  • 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. Compared to other companies in the Marine industry and the overall market, GLOBAL SHIP LEASE INC's return on equity significantly trails that of both the industry average and the S&P 500.

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