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."

Philippine Long Distance Telephone

Dividend Yield: 7.20%

Philippine Long Distance Telephone

(NYSE:

PHI

) shares currently have a dividend yield of 7.20%.

Philippine Long Distance Telephone Company provides telecommunications services in the Philippines. The company has a P/E ratio of 11.15.

The average volume for Philippine Long Distance Telephone has been 95,000 shares per day over the past 30 days. Philippine Long Distance Telephone has a market cap of $25.8 billion and is part of the telecommunications industry. Shares are down 15.6% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Philippine Long Distance Telephone

as a

hold

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

Highlights from the ratings report include:

  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Wireless Telecommunication Services industry and the overall market, PLDT-PHILIPPINE LNG DIST TEL's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 45.87% is the gross profit margin for PLDT-PHILIPPINE LNG DIST TEL which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.95% is above that of the industry average.
  • PHI, with its decline in revenue, underperformed when compared the industry average of 14.0%. Since the same quarter one year prior, revenues slightly dropped by 3.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 Wireless Telecommunication Services industry average. The net income has decreased by 22.9% when compared to the same quarter one year ago, dropping from $163.64 million to $126.09 million.
  • The debt-to-equity ratio of 1.36 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.39, which clearly demonstrates the inability to cover short-term cash needs.

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Costamare

Dividend Yield: 15.60%

Costamare

(NYSE:

CMRE

) shares currently have a dividend yield of 15.60%.

COSTAMARE INC. owns and charters containerships to liner companies worldwide. The company has a P/E ratio of 4.27.

The average volume for Costamare has been 340,600 shares per day over the past 30 days. Costamare has a market cap of $559.1 million and is part of the transportation industry. Shares are down 26.9% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Costamare

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk 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 18.0%. Since the same quarter one year prior, revenues slightly increased by 1.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Marine industry and the overall market, COSTAMARE INC's return on equity exceeds that of both the industry average and the S&P 500.
  • COSTAMARE INC has improved earnings per share by 18.9% 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, COSTAMARE INC increased its bottom line by earning $1.67 versus $1.37 in the prior year. For the next year, the market is expecting a contraction of 3.0% in earnings ($1.62 versus $1.67).
  • CMRE'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 63.20%, 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.
  • Currently the debt-to-equity ratio of 1.62 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.46, which clearly demonstrates the inability to cover short-term cash needs.

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Horizon Technology Finance

Dividend Yield: 12.80%

Horizon Technology Finance

(NASDAQ:

HRZN

) shares currently have a dividend yield of 12.80%.

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 13.26.

The average volume for Horizon Technology Finance has been 73,000 shares per day over the past 30 days. Horizon Technology Finance has a market cap of $125.1 million and is part of the financial services industry. Shares are down 8.4% year-to-date as of the close of trading on Tuesday.

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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 revenue growth, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, unimpressive growth in net income 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 4.2%. Since the same quarter one year prior, revenues slightly increased by 8.9%. 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 HORIZON TECHNOLOGY FINANCE is rather high; currently it is at 65.30%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 41.97% significantly outperformed against the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, HORIZON TECHNOLOGY FINANCE has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 27.94%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 40.00% compared to the year-earlier 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.
  • Net operating cash flow has significantly decreased to -$4.94 million or 115.52% 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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