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."

PennyMac Mortgage Investment

Dividend Yield: 11.70%

PennyMac Mortgage Investment

(NYSE:

PMT

) shares currently have a dividend yield of 11.70%.

PennyMac Mortgage Investment Trust, a specialty finance company, invests primarily in residential mortgage loans and mortgage-related assets in the United States. The company operates in two segments, Correspondent Production and Investment Activities. The company has a P/E ratio of 12.08.

The average volume for PennyMac Mortgage Investment has been 598,600 shares per day over the past 30 days. PennyMac Mortgage Investment has a market cap of $1.1 billion and is part of the real estate industry. Shares are up 5.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

PennyMac Mortgage Investment

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and increase in net income. However, as a counter to these strengths, we also find weaknesses including 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 12.0%. Since the same quarter one year prior, revenues rose by 32.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • PENNYMAC MORTGAGE INVEST TR 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, PENNYMAC MORTGAGE INVEST TR reported lower earnings of $1.15 versus $2.46 in the prior year. This year, the market expects an improvement in earnings ($1.50 versus $1.15).
  • PMT has underperformed the S&P 500 Index, declining 11.14% 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 company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, PENNYMAC MORTGAGE INVEST TR's return on equity is below that of both the industry average and the S&P 500.

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Physicians Realty

Dividend Yield: 4.50%

Physicians Realty

(NYSE:

DOC

) shares currently have a dividend yield of 4.50%.

Physicians Realty Trust, a self-managed healthcare real estate company, focuses on the acquisition, development, ownership, and management of healthcare properties that are leased to physicians, hospitals, and healthcare delivery systems. The company has a P/E ratio of 97.55.

The average volume for Physicians Realty has been 1,671,700 shares per day over the past 30 days. Physicians Realty has a market cap of $2.7 billion and is part of the real estate industry. Shares are up 20.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Physicians Realty

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:

  • DOC's very impressive revenue growth greatly exceeded the industry average of 12.0%. Since the same quarter one year prior, revenues leaped by 80.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • PHYSICIANS REALTY TR 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, PHYSICIANS REALTY TR turned its bottom line around by earning $0.14 versus -$0.19 in the prior year. This year, the market expects an improvement in earnings ($0.25 versus $0.14).
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • 38.76% is the gross profit margin for PHYSICIANS REALTY TR which we consider to be strong. Regardless of DOC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DOC's net profit margin of 11.17% is significantly lower than 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 Real Estate Investment Trusts (REITs) industry and the overall market, PHYSICIANS REALTY TR's return on equity significantly trails that of both the industry average and the S&P 500.

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Pier 1 Imports

Dividend Yield: 5.30%

Pier 1 Imports

(NYSE:

PIR

) shares currently have a dividend yield of 5.30%.

Pier 1 Imports, Inc. engages in the retail sale of decorative accessories, furniture, candles, housewares, gifts, and seasonal products. The company has a P/E ratio of 12.78.

The average volume for Pier 1 Imports has been 1,810,900 shares per day over the past 30 days. Pier 1 Imports has a market cap of $444.0 million and is part of the specialty retail industry. Shares are up 3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Pier 1 Imports

as a

hold

. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • Net operating cash flow has slightly increased to $122.18 million or 9.18% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -9.50%.
  • The debt-to-equity ratio is somewhat low, currently at 0.71, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that PIR's debt-to-equity ratio is low, the quick ratio, which is currently 0.56, displays a potential problem in covering short-term cash needs.
  • PIER 1 IMPORTS INC/DE's earnings per share declined by 37.8% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, PIER 1 IMPORTS INC/DE reported lower earnings of $0.48 versus $0.83 in the prior year. For the next year, the market is expecting a contraction of 6.3% in earnings ($0.45 versus $0.48).
  • 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 Specialty Retail industry. The net income has significantly decreased by 43.6% when compared to the same quarter one year ago, falling from $33.09 million to $18.68 million.

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