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."

M.D.C. Holdings

Dividend Yield: 4.50%

M.D.C. Holdings

(NYSE:

MDC

) shares currently have a dividend yield of 4.50%.

M.D.C. Holdings, Inc., through its subsidiaries, engages in homebuilding and financial services businesses in the United States. The company has a P/E ratio of 16.02.

The average volume for M.D.C. Holdings has been 466,300 shares per day over the past 30 days. M.D.C. Holdings has a market cap of $1.1 billion and is part of the materials & construction industry. Shares are down 9.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

M.D.C. Holdings

as a

hold

. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, a generally disappointing performance in the stock itself and poor profit margins.

Highlights from the ratings report include:

  • MDC HOLDINGS INC has improved earnings per share by 17.6% 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, MDC HOLDINGS INC increased its bottom line by earning $1.34 versus $1.29 in the prior year. This year, the market expects an improvement in earnings ($2.08 versus $1.34).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.6%. Since the same quarter one year prior, revenues slightly increased by 5.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MDC's debt-to-equity ratio of 0.73 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.
  • MDC has underperformed the S&P 500 Index, declining 23.85% 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.
  • Net operating cash flow has significantly decreased to -$14.99 million or 197.14% 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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GlaxoSmithKline

Dividend Yield: 5.30%

GlaxoSmithKline

(NYSE:

GSK

) shares currently have a dividend yield of 5.30%.

GlaxoSmithKline plc creates, discovers, develops, manufactures, and markets pharmaceutical products, including vaccines, over-the-counter medicines, and health-related consumer products worldwide. The company has a P/E ratio of 24.14.

The average volume for GlaxoSmithKline has been 3,275,400 shares per day over the past 30 days. GlaxoSmithKline has a market cap of $102.3 billion and is part of the drugs industry. Shares are up 5.8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

GlaxoSmithKline

as a

hold

. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, 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, deteriorating net income and generally higher debt management risk.

Highlights from the ratings report include:

  • Net operating cash flow has increased to $723.36 million or 31.65% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -9.28%.
  • GLAXOSMITHKLINE PLC 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, GLAXOSMITHKLINE PLC increased its bottom line by earning $5.11 versus $1.77 in the prior year. This year, the market expects an improvement in earnings ($91.56 versus $5.11).
  • GSK, with its very weak revenue results, has greatly underperformed against the industry average of 0.9%. Since the same quarter one year prior, revenues plummeted by 60.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The debt-to-equity ratio is very high at 6.05 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, GSK maintains a poor quick ratio of 0.75, which illustrates the inability to avoid short-term cash problems.
  • 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 Pharmaceuticals industry. The net income has significantly decreased by 96.6% when compared to the same quarter one year ago, falling from $12,012.17 million to $405.54 million.

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Colony Capital

Dividend Yield: 9.20%

Colony Capital

(NYSE:

CLNY

) shares currently have a dividend yield of 9.20%.

Colony Capital, Inc. is a real estate investment trust. The firm invests in the real estate markets of North America and Europe. The company has a P/E ratio of 15.98.

The average volume for Colony Capital has been 1,012,900 shares per day over the past 30 days. Colony Capital has a market cap of $2.0 billion and is part of the real estate industry. Shares are down 9.7% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Colony Capital

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and attractive valuation levels. 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:

  • CLNY's very impressive revenue growth greatly exceeded the industry average of 11.9%. Since the same quarter one year prior, revenues leaped by 74.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • COLONY CAPITAL 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, COLONY CAPITAL INC reported lower earnings of $0.92 versus $1.00 in the prior year. This year, the market expects an improvement in earnings ($1.70 versus $0.92).
  • CLNY'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 32.65%, 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.
  • The gross profit margin for COLONY CAPITAL INC is currently lower than what is desirable, coming in at 33.72%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 14.76% significantly trails the industry average.

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