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: 12.40%

Sabine Royalty

(NYSE:

SBR

) shares currently have a dividend yield of 12.40%.

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 7.73.

The average volume for Sabine Royalty has been 26,600 shares per day over the past 30 days. Sabine Royalty has a market cap of $468.9 million and is part of the financial services industry. Shares are down 5.8% year-to-date as of the close of trading on Monday.

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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 largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • 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 3.86, which clearly demonstrates the ability to cover short-term cash needs.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength 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.
  • The gross profit margin for SABINE ROYALTY TRUST is currently very high, coming in at 100.00%. SBR has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, SBR's net profit margin of 92.13% significantly outperformed against the industry.
  • The change in net income 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 has significantly decreased by 39.7% when compared to the same quarter one year ago, falling from $15.73 million to $9.48 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 43.37%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 39.81% 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.

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AG Mortgage Investment

Dividend Yield: 14.00%

AG Mortgage Investment

(NYSE:

MITT

) shares currently have a dividend yield of 14.00%.

AG Mortgage Investment Trust, Inc., a real estate investment trust, focuses on investing, acquiring, and managing a portfolio of mortgage assets, other real estate-related securities, and financial assets. It invests in residential mortgage-backed securities (RMBS), for which a U.S. The company has a P/E ratio of 12.81.

The average volume for AG Mortgage Investment has been 213,500 shares per day over the past 30 days. AG Mortgage Investment has a market cap of $487.2 million and is part of the real estate industry. Shares are down 6.8% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

AG Mortgage Investment

as a

hold

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and expanding profit margins. 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:

  • The gross profit margin for AG MORTGAGE INVESTMENT TRUST is currently very high, coming in at 82.10%. Regardless of MITT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MITT's net profit margin of 5.19% 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 95.5% when compared to the same quarter one year ago, falling from $41.17 million to $1.84 million.
  • 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 Investment Trusts (REITs) industry and the overall market, AG MORTGAGE INVESTMENT TRUST's return on equity is below that of both the industry average and the S&P 500.

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Fifth Street Finance Corporation

Dividend Yield: 11.80%

Fifth Street Finance Corporation

(NASDAQ:

FSC

) shares currently have a dividend yield of 11.80%.

Fifth Street Finance Corp. The company has a P/E ratio of 7.64.

The average volume for Fifth Street Finance Corporation has been 856,500 shares per day over the past 30 days. Fifth Street Finance Corporation has a market cap of $936.9 million and is part of the financial services industry. Shares are down 17.7% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Fifth Street Finance Corporation

as a

hold

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

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 161.67% to $173.18 million when compared to the same quarter last year. In addition, FIFTH STREET FINANCE CORP has also vastly surpassed the industry average cash flow growth rate of -505.86%.
  • The gross profit margin for FIFTH STREET FINANCE CORP is rather high; currently it is at 64.98%. Regardless of FSC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FSC's net profit margin of 37.27% significantly outperformed against the industry.
  • FSC, with its decline in revenue, underperformed when compared the industry average of 6.8%. Since the same quarter one year prior, revenues slightly dropped by 5.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 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. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, FIFTH STREET FINANCE CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Looking at the price performance of FSC's shares over the past 12 months, there is not much good news to report: the stock is down 35.38%, 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. 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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