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."

TAL International Group

Dividend Yield: 17.00%

TAL International Group

(NYSE:

TAL

) shares currently have a dividend yield of 17.00%.

TAL International Group, Inc., together with its subsidiaries, leases intermodal transportation equipment and provides maritime container management services worldwide. The company operates in two segments, Equipment Leasing and Equipment Trading. The company has a P/E ratio of 3.96.

The average volume for TAL International Group has been 421,300 shares per day over the past 30 days. TAL International Group has a market cap of $351.8 million and is part of the diversified services industry. Shares are down 28.9% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

TAL International Group

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk.

Highlights from the ratings report include:

  • TAL's revenue growth has slightly outpaced the industry average of 4.5%. Since the same quarter one year prior, revenues slightly increased by 1.1%. 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 TAL INTERNATIONAL GROUP INC is currently very high, coming in at 81.76%. Regardless of TAL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TAL's net profit margin of 7.93% compares favorably to the industry average.
  • The debt-to-equity ratio is very high at 4.84 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • Net operating cash flow has declined marginally to $88.25 million or 9.16% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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Innophos Holdings

Dividend Yield: 7.10%

Innophos Holdings

(NASDAQ:

IPHS

) shares currently have a dividend yield of 7.10%.

Innophos Holdings, Inc., through its subsidiaries, produces performance-critical and nutritional specialty ingredients with applications in food, beverage, dietary supplements, pharmaceutical, oral care, and industrial end markets. The company has a P/E ratio of 20.93.

The average volume for Innophos Holdings has been 214,300 shares per day over the past 30 days. Innophos Holdings has a market cap of $519.4 million and is part of the chemicals industry. Shares are down 2.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Innophos Holdings

as a

hold

. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • Net operating cash flow has increased to $22.99 million or 38.13% when compared to the same quarter last year. In addition, INNOPHOS HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of -14.29%.
  • The debt-to-equity ratio is somewhat low, currently at 0.64, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.94 is somewhat weak and could be cause for future problems.
  • IPHS, with its decline in revenue, slightly underperformed the industry average of 10.9%. Since the same quarter one year prior, revenues fell by 12.3%. Weakness in the company's revenue seems to have hurt the 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. In comparison to the other companies in the Chemicals industry and the overall market, INNOPHOS HOLDINGS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The gross profit margin for INNOPHOS HOLDINGS INC is rather low; currently it is at 19.66%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.71% is significantly below that of the industry average.

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Hercules Capital

Dividend Yield: 11.60%

Hercules Capital

(NYSE:

HTGC

) shares currently have a dividend yield of 11.60%.

Hercules Technology Growth Capital, Inc. The company has a P/E ratio of 9.06.

The average volume for Hercules Capital has been 371,100 shares per day over the past 30 days. Hercules Capital has a market cap of $770.5 million and is part of the real estate industry. Shares are down 9.8% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Hercules Capital

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations 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 revenue growth greatly exceeded the industry average of 4.2%. Since the same quarter one year prior, revenues rose by 27.3%. 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.
  • Net operating cash flow has significantly increased by 683.09% to $101.86 million when compared to the same quarter last year. In addition, HERCULES CAPITAL INC has also vastly surpassed the industry average cash flow growth rate of 88.31%.
  • The gross profit margin for HERCULES CAPITAL INC is currently very high, coming in at 78.47%. Regardless of HTGC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.64% trails the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 31.30%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 78.26% 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.
  • 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 significantly decreased by 73.1% when compared to the same quarter one year ago, falling from $15.18 million to $4.08 million.

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