Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer

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."

American Capital Mortgage Investment

Dividend Yield: 10.90%

American Capital Mortgage Investment

(NASDAQ:

MTGE

) shares currently have a dividend yield of 10.90%.

American Capital Mortgage Investment Corp. operates as a real estate investment trust (REIT) in the United States. The company has a P/E ratio of 6.01.

The average volume for American Capital Mortgage Investment has been 479,400 shares per day over the past 30 days. American Capital Mortgage Investment has a market cap of $940.9 million and is part of the real estate industry. Shares are down 5% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

American Capital Mortgage Investment

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 weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • MTGE's very impressive revenue growth greatly exceeded the industry average of 10.1%. Since the same quarter one year prior, revenues leaped by 539.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, AMERICAN CAPITAL MTG INV CP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • MTGE has underperformed the S&P 500 Index, declining 5.02% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Net operating cash flow has significantly decreased to $15.64 million or 64.50% 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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Xinyuan Real Estate

Dividend Yield: 7.10%

Xinyuan Real Estate

(NYSE:

XIN

) shares currently have a dividend yield of 7.10%.

Xinyuan Real Estate Co., Ltd., together with its subsidiaries, develops residential real estate properties for middle-income consumers, primarily focusing on selected Tier II and III cities in China. The company has a P/E ratio of 1.66.

The average volume for Xinyuan Real Estate has been 195,400 shares per day over the past 30 days. Xinyuan Real Estate has a market cap of $213.1 million and is part of the real estate industry. Shares are up 18.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Xinyuan Real Estate

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 1.4%. Since the same quarter one year prior, revenues rose by 25.5%. 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.
  • Despite the current debt-to-equity ratio of 1.60, it is still below the industry average, suggesting that this level of debt is acceptable within the Real Estate Management & Development industry. Despite the fact that XIN's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.53 is low and demonstrates weak liquidity.
  • 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 Real Estate Management & Development industry and the overall market, XINYUAN REAL ESTATE CO -ADR's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for XINYUAN REAL ESTATE CO -ADR is currently lower than what is desirable, coming in at 26.48%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.99% significantly trails the industry average.

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Dynex Capital

Dividend Yield: 11.50%

Dynex Capital

(NYSE:

DX

) shares currently have a dividend yield of 11.50%.

Dynex Capital, Inc., a mortgage real estate investment trust (REIT), invests in mortgage assets in the United States. The company has a P/E ratio of 24.65.

The average volume for Dynex Capital has been 226,600 shares per day over the past 30 days. Dynex Capital has a market cap of $460.4 million and is part of the real estate industry. Shares are up 1.3% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Dynex Capital

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, 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 revenue growth came in higher than the industry average of 10.1%. Since the same quarter one year prior, revenues rose by 20.3%. 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 DYNEX CAPITAL INC is currently very high, coming in at 88.19%. Regardless of DX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DX's net profit margin of 10.44% is significantly lower than the industry average.
  • 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 83.0% when compared to the same quarter one year ago, falling from $21.56 million to $3.67 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, DYNEX CAPITAL INC underperformed against that of the industry average and is significantly less than that of the S&P 500.

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