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

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."

Spirit Realty Capital

Dividend Yield: 6.80%

Spirit Realty Capital

(NYSE:

SRC

) shares currently have a dividend yield of 6.80%.

Spirit Realty Capital, Inc is a publicly traded real estate investment trust.

The average volume for Spirit Realty Capital has been 5,299,100 shares per day over the past 30 days. Spirit Realty Capital has a market cap of $4.4 billion and is part of the real estate industry. Shares are down 14.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Spirit Realty Capital

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share 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:

  • SRC's revenue growth has slightly outpaced the industry average of 8.9%. Since the same quarter one year prior, revenues rose by 12.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • SPIRIT REALTY CAPITAL INC 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, SPIRIT REALTY CAPITAL INC continued to lose money by earning -$0.10 versus -$0.11 in the prior year. This year, the market expects an improvement in earnings ($0.21 versus -$0.10).
  • 45.15% is the gross profit margin for SPIRIT REALTY CAPITAL INC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, SRC's net profit margin of 15.60% significantly trails the industry average.
  • SRC has underperformed the S&P 500 Index, declining 13.00% 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, SPIRIT REALTY CAPITAL INC's return on equity significantly trails that of both the industry average and the S&P 500.

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Lexmark International

Dividend Yield: 4.20%

Lexmark International

(NYSE:

LXK

) shares currently have a dividend yield of 4.20%.

Lexmark International, Inc., together with its subsidiaries, operates as a developer, manufacturer, and supplier of printing, imaging, device management, managed print services (MPS), document workflow, and business process and content management solutions worldwide.

The average volume for Lexmark International has been 769,400 shares per day over the past 30 days. Lexmark International has a market cap of $2.1 billion and is part of the computer hardware industry. Shares are down 16.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Lexmark International

as a

hold

. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk.

Highlights from the ratings report include:

  • The gross profit margin for LEXMARK INTL INC is rather high; currently it is at 50.06%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -4.11% is in-line with the industry average.
  • The revenue fell significantly faster than the industry average of 35.9%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • LEXMARK INTL INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, LEXMARK INTL INC reported lower earnings of $1.23 versus $4.10 in the prior year. This year, the market expects an improvement in earnings ($3.56 versus $1.23).
  • 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 Computers & Peripherals industry and the overall market, LEXMARK INTL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 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 Computers & Peripherals industry. The net income has significantly decreased by 196.5% when compared to the same quarter one year ago, falling from $37.50 million to -$36.20 million.

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PDL BioPharma

Dividend Yield: 10.20%

PDL BioPharma

(NASDAQ:

PDLI

) shares currently have a dividend yield of 10.20%.

PDL BioPharma, Inc. manages a portfolio of patents and royalty assets in the United States and Europe. The company is involved in the humanization of monoclonal antibodies and the discovery of a new generation of targeted treatments for cancer and immunologic diseases. It offers Queen et al. The company has a P/E ratio of 3.07.

The average volume for PDL BioPharma has been 2,626,500 shares per day over the past 30 days. PDL BioPharma has a market cap of $965.7 million and is part of the drugs industry. Shares are down 23.9% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

PDL BioPharma

as a

hold

. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, a generally disappointing performance in the stock itself and generally higher debt management risk.

Highlights from the ratings report include:

  • PDL BIOPHARMA INC has improved earnings per share by 13.6% 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, PDL BIOPHARMA INC increased its bottom line by earning $1.89 versus $1.73 in the prior year. This year, the market expects an improvement in earnings ($2.11 versus $1.89).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 22.0%. Since the same quarter one year prior, revenues rose by 15.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for PDL BIOPHARMA INC is currently very high, coming in at 94.00%. Regardless of PDLI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PDLI's net profit margin of 66.11% significantly outperformed against the industry.
  • PDLI'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 36.03%, 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.
  • Net operating cash flow has decreased to $71.85 million or 21.71% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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