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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."

Select Income REIT

Dividend Yield: 10.10%

Select Income REIT

(NYSE:

SIR

) shares currently have a dividend yield of 10.10%.

Select Income REIT, a real estate investment trust (REIT), primarily owns and invests in single tenant and net leased properties. The company has a P/E ratio of 16.60.

The average volume for Select Income REIT has been 494,300 shares per day over the past 30 days. Select Income REIT has a market cap of $1.8 billion and is part of the real estate industry. Shares are down 18.1% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Select Income REIT

TheStreet Recommends

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels and increase in net income. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • SIR's very impressive revenue growth greatly exceeded the industry average of 6.1%. Since the same quarter one year prior, revenues leaped by 97.3%. 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 SELECT INCOME REIT is rather high; currently it is at 51.52%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, SIR's net profit margin of 27.48% compares favorably to the industry average.
  • SELECT INCOME REIT's earnings per share declined by 15.0% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, SELECT INCOME REIT reported lower earnings of $1.91 versus $2.11 in the prior year.
  • 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, SELECT INCOME REIT's return on equity is below that of both the industry average and the S&P 500.

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Colony Capital

Dividend Yield: 7.70%

Colony Capital

(NYSE:

CLNY

) shares currently have a dividend yield of 7.70%.

Colony Capital, Inc. is a publicly owned real estate investment trust. The firm invests in the real estate markets across the globe. It owns and manages a diversified portfolio of primarily real estate equity and debt-related investments. The company has a P/E ratio of 21.75.

The average volume for Colony Capital has been 991,800 shares per day over the past 30 days. Colony Capital has a market cap of $2.3 billion and is part of the real estate industry. Shares are down 15.3% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Colony Capital

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust 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:

  • CLNY's very impressive revenue growth greatly exceeded the industry average of 6.1%. Since the same quarter one year prior, revenues leaped by 240.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • COLONY CAPITAL INC has improved earnings per share by 6.7% 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, COLONY CAPITAL INC reported lower earnings of $1.00 versus $1.19 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus $1.00).
  • CLNY has underperformed the S&P 500 Index, declining 16.13% 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, COLONY CAPITAL INC's return on equity is below that of both the industry average and the S&P 500.

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Hersha Hospitality

Dividend Yield: 4.70%

Hersha Hospitality

(NYSE:

HT

) shares currently have a dividend yield of 4.70%.

Operates as a Maryland REIT that focuses primarily on owning and operating high quality, upscale and mid-scale limited service and extended-stay hotels. Its portfolio consisted of 31 wholly-owned limited and full service properties and joint venture investments in 16 hotels as of Dec. 31, 2005. The company has a P/E ratio of 49.35.

The average volume for Hersha Hospitality has been 394,100 shares per day over the past 30 days. Hersha Hospitality has a market cap of $1.1 billion and is part of the real estate industry. Shares are down 17.1% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Hersha Hospitality

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income 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, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • HT's revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 10.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 85.4% when compared to the same quarter one year prior, rising from $7.64 million to $14.16 million.
  • HERSHA HOSPITALITY 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, HERSHA HOSPITALITY TRUST increased its bottom line by earning $1.08 versus $0.08 in the prior year. For the next year, the market is expecting a contraction of 46.3% in earnings ($0.58 versus $1.08).
  • HT has underperformed the S&P 500 Index, declining 17.69% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • 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. In comparison to the other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, HERSHA HOSPITALITY TRUST's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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