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.

TST Recommends

The following pages contain our analysis of 3 stocks with substantial yields, that ultimately, we have rated "Hold."

Annaly Capital Management

Dividend Yield: 11.80%

Annaly Capital Management

(NYSE:

NLY

) shares currently have a dividend yield of 11.80%.

Annaly Capital Management, Inc. owns a portfolio of real estate related investments in the United States. The company has a P/E ratio of 169.33.

The average volume for Annaly Capital Management has been 10,068,500 shares per day over the past 30 days. Annaly Capital Management has a market cap of $9.6 billion and is part of the real estate industry. Shares are down 5.2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Annaly Capital Management

as a

hold

. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 368.3% when compared to the same quarter one year prior, rising from -$335.51 million to $900.22 million.
  • The gross profit margin for ANNALY CAPITAL MANAGEMENT is currently very high, coming in at 89.73%. Regardless of NLY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NLY's net profit margin of 177.72% significantly outperformed against the industry.
  • ANNALY CAPITAL MANAGEMENT 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, ANNALY CAPITAL MANAGEMENT swung to a loss, reporting -$0.96 versus $3.72 in the prior year. This year, the market expects an improvement in earnings ($1.10 versus -$0.96).
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, ANNALY CAPITAL MANAGEMENT's return on equity significantly trails that of both the industry average and the S&P 500.
  • NLY has underperformed the S&P 500 Index, declining 10.40% from its price level of one year ago. 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.

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DDR

Dividend Yield: 4.20%

DDR

(NYSE:

DDR

) shares currently have a dividend yield of 4.20%.

DDR Corp. is an equity real estate investment trust. It invests in the real estate markets of the United States and Puerto Rico. The firm is in the business of acquiring, owning, developing, redeveloping, expanding, leasing and managing shopping centers.

The average volume for DDR has been 3,738,700 shares per day over the past 30 days. DDR has a market cap of $5.9 billion and is part of the real estate industry. Shares are down 10.3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

DDR

as a

hold

. Among the primary strengths of the company is its revenue growth. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

  • DDR's revenue growth has slightly outpaced the industry average of 7.1%. Since the same quarter one year prior, revenues slightly increased by 8.4%. 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.
  • DDR CORP 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, DDR CORP turned its bottom line around by earning $0.02 versus -$0.05 in the prior year. For the next year, the market is expecting a contraction of 3400.0% in earnings (-$0.66 versus $0.02).
  • The share price of DDR CORP has not done very well: it is down 6.23% 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. 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 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 75.5% when compared to the same quarter one year ago, falling from $76.02 million to $18.60 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, DDR CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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Parkway Properties

Dividend Yield: 4.30%

Parkway Properties

(NYSE:

PKY

) shares currently have a dividend yield of 4.30%.

Parkway Properties, Inc., a real estate investment trust (REIT), engages in the operation, acquisition, ownership, management, and leasing of office properties. It operates and invests principally in office properties in the southeastern and southwestern United States and Chicago. The company has a P/E ratio of 28.56.

The average volume for Parkway Properties has been 779,800 shares per day over the past 30 days. Parkway Properties has a market cap of $1.9 billion and is part of the real estate industry. Shares are down 6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Parkway Properties

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 reasonable 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:

  • PKY's revenue growth has slightly outpaced the industry average of 7.1%. Since the same quarter one year prior, revenues rose by 15.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • PARKWAY PROPERTIES INC reported significant earnings per share improvement 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, PARKWAY PROPERTIES INC turned its bottom line around by earning $0.29 versus -$0.60 in the prior year. For the next year, the market is expecting a contraction of 124.1% in earnings (-$0.07 versus $0.29).
  • PKY has underperformed the S&P 500 Index, declining 15.31% 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.
  • The gross profit margin for PARKWAY PROPERTIES INC is currently extremely low, coming in at 9.56%. Regardless of PKY's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, PKY's net profit margin of 11.07% is significantly lower than the industry average.

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