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."

Royal Dutch Shell

Dividend Yield: 7.90%

Royal Dutch Shell

(NYSE:

RDS.B

) shares currently have a dividend yield of 7.90%.

Royal Dutch Shell plc operates as an independent oil and gas company worldwide. It operates through Upstream and Downstream segments. The company explores for and extracts crude oil, natural gas, and natural gas liquids. The company has a P/E ratio of 6.06.

The average volume for Royal Dutch Shell has been 3,353,700 shares per day over the past 30 days. Royal Dutch Shell has a market cap of $152.8 billion and is part of the energy industry. Shares are up 4.8% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Royal Dutch Shell

as a

hold

. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures 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, weak operating cash flow 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 Oil, Gas & Consumable Fuels industry. The net income increased by 57.8% when compared to the same quarter one year prior, rising from $595.00 million to $939.00 million.
  • The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels.
  • ROYAL DUTCH SHELL PLC 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, ROYAL DUTCH SHELL PLC reported lower earnings of $0.60 versus $4.70 in the prior year. This year, the market expects an improvement in earnings ($5.71 versus $0.60).
  • Net operating cash flow has decreased to $5,423.00 million or 43.55% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, ROYAL DUTCH SHELL PLC has marginally lower results.
  • RDS.B'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 27.81%, 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. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.

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Senior Housing Properties

Dividend Yield: 9.50%

Senior Housing Properties

(NYSE:

SNH

) shares currently have a dividend yield of 9.50%.

Senior Housing Properties Trust, a real estate investment trust (REIT), primarily invests in senior housing properties in the United States. The trust invests in hospitals, nursing homes, senior apartments, independent living properties, and assisted living properties. The company has a P/E ratio of 30.33.

The average volume for Senior Housing Properties has been 2,330,900 shares per day over the past 30 days. Senior Housing Properties has a market cap of $3.9 billion and is part of the real estate industry. Shares are up 12.9% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Senior Housing Properties

as a

hold

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

Highlights from the ratings report include:

  • SNH's revenue growth has slightly outpaced the industry average of 8.0%. Since the same quarter one year prior, revenues rose by 17.6%. 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.
  • 35.97% is the gross profit margin for SENIOR HOUSING PPTYS TRUST which we consider to be strong. Regardless of SNH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SNH's net profit margin of 3.52% is significantly lower than the industry average.
  • 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 78.9% when compared to the same quarter one year ago, falling from $45.29 million to $9.54 million.
  • 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, SENIOR HOUSING PPTYS TRUST's return on equity is below that of both the industry average and the S&P 500.

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Pebblebrook Hotel

Dividend Yield: 4.30%

Pebblebrook Hotel

(NYSE:

PEB

) shares currently have a dividend yield of 4.30%.

Pebblebrook Hotel Trust, through Pebblebrook Hotel, L.P., operates as a real estate investment trust. The company acquires and invests primarily in hotel properties located in the United States. The company has a P/E ratio of 30.68.

The average volume for Pebblebrook Hotel has been 1,044,500 shares per day over the past 30 days. Pebblebrook Hotel has a market cap of $2.1 billion and is part of the real estate industry. Shares are up 1.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Pebblebrook Hotel

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 also find weaknesses including poor profit margins 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 8.0%. Since the same quarter one year prior, revenues rose by 22.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • PEBBLEBROOK HOTEL TRUST 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, PEBBLEBROOK HOTEL TRUST increased its bottom line by earning $0.94 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($1.44 versus $0.94).
  • PEB'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 40.75%, 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. 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 gross profit margin for PEBBLEBROOK HOTEL TRUST is rather low; currently it is at 16.93%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 11.54% significantly trails the industry average.

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