Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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."

Sabine Royalty

Dividend Yield: 8.50%

Sabine Royalty

(NYSE:

SBR

) shares currently have a dividend yield of 8.50%.

Sabine Royalty Trust holds royalty and mineral interests in various oil and gas properties in the United States. The company has a P/E ratio of 9.56.

The average volume for Sabine Royalty has been 38,200 shares per day over the past 30 days. Sabine Royalty has a market cap of $579.5 million and is part of the financial services industry. Shares are up 8.7% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Sabine Royalty

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, 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 find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 6.5%. Since the same quarter one year prior, revenues slightly increased by 6.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • SBR has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.63, which clearly demonstrates the ability to cover short-term cash needs.
  • The net income growth from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income increased by 6.7% when compared to the same quarter one year prior, going from $16.83 million to $17.96 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SABINE ROYALTY TRUST's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • SBR'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 25.21%, 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.

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Garrison Capital

Dividend Yield: 9.90%

Garrison Capital

(NASDAQ:

GARS

) shares currently have a dividend yield of 9.90%.

Garrison Capital Inc. is a business development company specializing in investments primarily in the debt and equity of middle market companies. The company has a P/E ratio of 7.53.

The average volume for Garrison Capital has been 34,000 shares per day over the past 30 days. Garrison Capital has a market cap of $237.1 million and is part of the financial services industry. Shares are down 2.6% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Garrison Capital

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, 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 0.2%. Since the same quarter one year prior, revenues rose by 38.6%. 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.
  • Net operating cash flow has significantly increased by 197.35% to $12.56 million when compared to the same quarter last year. In addition, GARRISON CAPITAL INC has also vastly surpassed the industry average cash flow growth rate of -217.06%.
  • 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 Capital Markets industry and the overall market on the basis of return on equity, GARRISON CAPITAL INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • In its most recent trading session, GARS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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, 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 Capital Markets industry. The net income has decreased by 24.8% when compared to the same quarter one year ago, dropping from $6.75 million to $5.08 million.

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Xinyuan Real Estate

Dividend Yield: 8.80%

Xinyuan Real Estate

(NYSE:

XIN

) shares currently have a dividend yield of 8.80%.

Xinyuan Real Estate Co., Ltd., together with its subsidiaries, develops residential real estate properties for middle-income consumers, primarily focusing on selected Tier II and III cities in China. The company has a P/E ratio of 1.26.

The average volume for Xinyuan Real Estate has been 249,500 shares per day over the past 30 days. Xinyuan Real Estate has a market cap of $162.5 million and is part of the real estate industry. Shares are down 9.3% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Xinyuan Real Estate

as a

hold

. Among the primary strengths of the company is its attractive valuation levels, considering its current price compared to earnings, book value and other measures. At the same time, however, 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:

  • The revenue fell significantly faster than the industry average of 5.6%. Since the same quarter one year prior, revenues fell by 32.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Despite the current debt-to-equity ratio of 1.51, it is still below the industry average, suggesting that this level of debt is acceptable within the Real Estate Management & Development industry. Despite the fact that XIN's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.63 is low and demonstrates weak liquidity.
  • 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. When compared to other companies in the Real Estate Management & Development industry and the overall market, XINYUAN REAL ESTATE CO -ADR's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for XINYUAN REAL ESTATE CO -ADR is currently lower than what is desirable, coming in at 26.56%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.75% trails that of the industry average.

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