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."

NGL Energy Partners

Dividend Yield: 10.80%

NGL Energy Partners

(NYSE:

NGL

) shares currently have a dividend yield of 10.80%.

NGL Energy Partners LP, through its subsidiaries, engages in the crude oil logistics, water solutions, liquids, retail propane, and refined products and renewables businesses in the United States.

The average volume for NGL Energy Partners has been 345,400 shares per day over the past 30 days. NGL Energy Partners has a market cap of $2.5 billion and is part of the energy industry. Shares are down 17.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

NGL Energy Partners

as a

hold

. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 788.86% to $81.83 million when compared to the same quarter last year. In addition, NGL ENERGY PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -20.54%.
  • NGL ENERGY PARTNERS LP has improved earnings per share by 9.7% 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, NGL ENERGY PARTNERS LP swung to a loss, reporting -$0.44 versus $0.32 in the prior year. This year, the market expects an improvement in earnings ($0.62 versus -$0.44).
  • Despite the weak revenue results, NGL has significantly outperformed against the industry average of 34.6%. Since the same quarter one year prior, revenues slightly dropped by 3.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The debt-to-equity ratio of 1.47 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, NGL maintains a poor quick ratio of 0.89, which illustrates the inability to avoid short-term cash problems.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, NGL ENERGY PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.

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New Mountain Finance

Dividend Yield: 9.40%

New Mountain Finance

(NYSE:

NMFC

) shares currently have a dividend yield of 9.40%.

New Mountain Finance Corporation is a Business Development Company specializing in investments in middle market companies and debt securities at various levels of the capital structure, including first and second lien debt, unsecured notes, bonds, and mezzanine securities. The company has a P/E ratio of 10.08.

The average volume for New Mountain Finance has been 214,700 shares per day over the past 30 days. New Mountain Finance has a market cap of $844.5 million and is part of the financial services industry. Shares are down 1.3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

New Mountain Finance

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, deteriorating net income and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • NMFC's revenue growth has slightly outpaced the industry average of 6.9%. Since the same quarter one year prior, revenues rose by 12.4%. 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 NEW MOUNTAIN FINANCE CORP is rather high; currently it is at 68.60%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 53.45% significantly outperformed against the industry average.
  • After a year of stock price fluctuations, the net result is that NMFC'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. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • 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, NEW MOUNTAIN FINANCE CORP's return on equity is below that of both the industry average and the S&P 500.

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Horizon Technology Finance

Dividend Yield: 13.80%

Horizon Technology Finance

(NASDAQ:

HRZN

) shares currently have a dividend yield of 13.80%.

Horizon Technology Finance Corporation, a specialty finance company, lends to and invests in development-stage companies in the United States. The company has a P/E ratio of 12.42.

The average volume for Horizon Technology Finance has been 87,600 shares per day over the past 30 days. Horizon Technology Finance has a market cap of $116.6 million and is part of the financial services industry. Shares are down 28.2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Horizon Technology Finance

as a

hold

. The company's strengths can be seen in multiple areas, such as its expanding profit margins, 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, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • The gross profit margin for HORIZON TECHNOLOGY FINANCE is rather high; currently it is at 62.35%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 52.91% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 204.05% to $5.44 million when compared to the same quarter last year. In addition, HORIZON TECHNOLOGY FINANCE has also vastly surpassed the industry average cash flow growth rate of -433.20%.
  • HRZN, with its decline in revenue, underperformed when compared the industry average of 6.9%. Since the same quarter one year prior, revenues slightly dropped by 3.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The share price of HORIZON TECHNOLOGY FINANCE has not done very well: it is down 23.67% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Capital Markets industry average. The net income has significantly decreased by 25.0% when compared to the same quarter one year ago, falling from $5.13 million to $3.85 million.

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