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."

NuStar GP Holdings

Dividend Yield: 8.90%

NuStar GP Holdings

(NYSE:

NSH

) shares currently have a dividend yield of 8.90%.

NuStar GP Holdings, LLC, through its ownership interests in NuStar Energy L.P., engages in the transportation of petroleum products and anhydrous ammonia. The company is also involved in the terminalling, storage, and marketing of petroleum products. The company has a P/E ratio of 14.57.

The average volume for NuStar GP Holdings has been 157,300 shares per day over the past 30 days. NuStar GP Holdings has a market cap of $1.1 billion and is part of the energy industry. Shares are up 14.7% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

NuStar GP Holdings

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including 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 revenue growth greatly exceeded the industry average of 34.2%. Since the same quarter one year prior, revenues slightly increased by 5.5%. 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, NUSTAR GP HOLDINGS LLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • NSH's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.40 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • NUSTAR GP HOLDINGS LLC's earnings per share declined by 11.8% in the most recent quarter compared to 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, NUSTAR GP HOLDINGS LLC increased its bottom line by earning $1.68 versus $1.44 in the prior year. For the next year, the market is expecting a contraction of 12.5% in earnings ($1.47 versus $1.68).
  • Looking at the price performance of NSH's shares over the past 12 months, there is not much good news to report: the stock is down 30.71%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.

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Solar Capital

Dividend Yield: 9.00%

Solar Capital

(NASDAQ:

SLRC

) shares currently have a dividend yield of 9.00%.

Solar Capital Ltd. is a business development company specializing in investments in leveraged middle market companies. The company has a P/E ratio of 22.59.

The average volume for Solar Capital has been 127,400 shares per day over the past 30 days. Solar Capital has a market cap of $754.2 million and is part of the financial services industry. Shares are up 7.6% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Solar Capital

as a

hold

. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • The gross profit margin for SOLAR CAPITAL LTD is rather high; currently it is at 68.17%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -45.00% is in-line with the industry average.
  • Despite the weak revenue results, SLRC has outperformed against the industry average of 22.6%. Since the same quarter one year prior, revenues slightly dropped by 4.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • SOLAR CAPITAL LTD 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, SOLAR CAPITAL LTD reported lower earnings of $0.34 versus $1.12 in the prior year. This year, the market expects an improvement in earnings ($1.64 versus $0.34).
  • Net operating cash flow has significantly decreased to -$265.88 million or 379.62% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The share price of SOLAR CAPITAL LTD has not done very well: it is down 13.24% 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. 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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Gladstone Commercial

Dividend Yield: 9.10%

Gladstone Commercial

(NASDAQ:

GOOD

) shares currently have a dividend yield of 9.10%.

Gladstone Commercial Corporation operates as a real estate investment trust (REIT) in the United States. It engages in investing in and owning net leased industrial and commercial real properties, and making long-term industrial and commercial mortgage loans.

The average volume for Gladstone Commercial has been 111,300 shares per day over the past 30 days. Gladstone Commercial has a market cap of $372.5 million and is part of the real estate industry. Shares are up 16.2% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Gladstone Commercial

as a

hold

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

Highlights from the ratings report include:

  • GOOD's revenue growth has slightly outpaced the industry average of 8.1%. Since the same quarter one year prior, revenues rose by 13.4%. 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.
  • GLADSTONE COMMERCIAL 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GLADSTONE COMMERCIAL CORP continued to lose money by earning -$0.07 versus -$0.61 in the prior year. This year, the market expects an improvement in earnings (-$0.06 versus -$0.07).
  • 44.21% is the gross profit margin for GLADSTONE COMMERCIAL CORP which we consider to be strong. Regardless of GOOD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GOOD's net profit margin of 11.77% is significantly lower than the industry average.
  • Net operating cash flow has decreased to $6.61 million or 30.55% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • 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 58.4% when compared to the same quarter one year ago, falling from $6.16 million to $2.57 million.

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