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."

JMP Group

Dividend Yield: 9.50%

JMP Group

(NYSE:

JMP

) shares currently have a dividend yield of 9.50%.

JMP Group LLC, together with its subsidiaries, provides investment banking and asset management services in the United States. The company operates through Broker-Dealer, Asset Management, and Corporate Credit segments.

The average volume for JMP Group has been 68,000 shares per day over the past 30 days. JMP Group has a market cap of $107.3 million and is part of the financial services industry. Shares are down 7.7% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

JMP Group

as a

hold

. The company's strongest point has been its very decent return on equity which we feel should persist. At the same time, however, we also find weaknesses including deteriorating net income, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • JMP, with its decline in revenue, underperformed when compared the industry average of 4.5%. Since the same quarter one year prior, revenues fell by 32.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • JMP GROUP LLC 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, JMP GROUP LLC swung to a loss, reporting -$0.03 versus $0.56 in the prior year. This year, the market expects an improvement in earnings ($0.51 versus -$0.03).
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 28.30%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 125.00% 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.
  • 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 Capital Markets industry and the overall market, JMP GROUP LLC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for JMP GROUP LLC is currently extremely low, coming in at 12.05%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -2.85% is significantly below that of the industry average.

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Holly Energy Partners

Dividend Yield: 7.20%

Holly Energy Partners

(NYSE:

HEP

) shares currently have a dividend yield of 7.20%.

Holly Energy Partners, L.P. owns and operates petroleum product and crude pipelines, storage tanks, distribution terminals, and loading rack facilities. The company has a P/E ratio of 19.62.

The average volume for Holly Energy Partners has been 188,500 shares per day over the past 30 days. Holly Energy Partners has a market cap of $1.8 billion and is part of the energy industry. Shares are up 5.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Holly Energy Partners

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and expanding profit margins. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 34.6%. Since the same quarter one year prior, revenues slightly increased by 10.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • HOLLY ENERGY PARTNERS LP has improved earnings per share by 48.5% 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, HOLLY ENERGY PARTNERS LP increased its bottom line by earning $1.60 versus $1.20 in the prior year. This year, the market expects an improvement in earnings ($1.79 versus $1.60).
  • After a year of stock price fluctuations, the net result is that HEP'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. 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 debt-to-equity ratio is very high at 3.49 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, HEP's quick ratio is somewhat strong at 1.15, demonstrating the ability to handle short-term liquidity needs.

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Gladstone Investment

Dividend Yield: 10.50%

Gladstone Investment

(NASDAQ:

GAIN

) shares currently have a dividend yield of 10.50%.

Gladstone Investment Corporation is a business development company specializing in buyouts; recapitalizations; refinancing existing debt; senior debt securities; junior subordinated debt securities; limited liability company interests, and warrants or options. The company has a P/E ratio of 50.79.

The average volume for Gladstone Investment has been 161,600 shares per day over the past 30 days. Gladstone Investment has a market cap of $215.2 million and is part of the financial services industry. Shares are down 8% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Gladstone Investment

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • GAIN's revenue growth has slightly outpaced the industry average of 4.5%. Since the same quarter one year prior, revenues slightly increased by 4.4%. 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.
  • Net operating cash flow has significantly increased by 150.09% to $19.93 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 139.02%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, GLADSTONE INVESTMENT CORP/DE has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • GLADSTONE INVESTMENT CORP/DE 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, GLADSTONE INVESTMENT CORP/DE turned its bottom line around by earning $1.88 versus -$0.06 in the prior year. For the next year, the market is expecting a contraction of 62.5% in earnings ($0.71 versus $1.88).
  • 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 181.9% when compared to the same quarter one year ago, falling from $7.59 million to -$6.21 million.

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