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."

Medallion Financial

Dividend Yield: 15.00%

Medallion Financial

(NASDAQ:

TAXI

) shares currently have a dividend yield of 15.00%.

Medallion Financial Corp., through its subsidiaries, operates as a specialty finance company in the United States. The company engages in originating, acquiring, and servicing loans that finance taxicab medallions and various types of commercial businesses. The company has a P/E ratio of 5.38.

The average volume for Medallion Financial has been 184,400 shares per day over the past 30 days. Medallion Financial has a market cap of $162.4 million and is part of the financial services industry. Shares are down 5.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Medallion Financial

as a

hold

. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 9.2% when compared to the same quarter one year prior, going from $6.69 million to $7.31 million.
  • The gross profit margin for MEDALLION FINANCIAL CORP is rather high; currently it is at 61.84%. Regardless of TAXI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TAXI's net profit margin of 67.79% significantly outperformed against the industry.
  • MEDALLION FINANCIAL CORP has improved earnings per share by 11.1% 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, MEDALLION FINANCIAL CORP reported lower earnings of $1.14 versus $1.16 in the prior year. This year, the market expects an improvement in earnings ($1.23 versus $1.14).
  • TAXI'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 29.48%, 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 significantly decreased to $0.38 million or 97.99% 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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Costamare

Dividend Yield: 15.40%

Costamare

(NYSE:

CMRE

) shares currently have a dividend yield of 15.40%.

COSTAMARE INC. owns and charters containerships to liner companies worldwide. The company has a P/E ratio of 4.69.

The average volume for Costamare has been 246,500 shares per day over the past 30 days. Costamare has a market cap of $568.1 million and is part of the transportation industry. Shares are down 26.4% year-to-date as of the close of trading on Thursday.

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TheStreet Recommends

TheStreet Ratings rates

Costamare

as a

hold

. The company's strengths can be seen in multiple areas, such as its notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Marine industry and the overall market, COSTAMARE INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for COSTAMARE INC is currently very high, coming in at 72.84%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 28.07% significantly outperformed against the industry average.
  • Despite the weak revenue results, CMRE has outperformed against the industry average of 15.1%. Since the same quarter one year prior, revenues slightly dropped by 0.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Net operating cash flow has declined marginally to $59.35 million or 9.75% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Currently the debt-to-equity ratio of 1.72 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, CMRE has a quick ratio of 0.55, this demonstrates the lack of ability of the company to cover short-term liquidity needs.

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Evolving Systems

Dividend Yield: 8.40%

Evolving Systems

(NASDAQ:

EVOL

) shares currently have a dividend yield of 8.40%.

Evolving Systems, Inc. provides software solutions and services to the wireless, wireline, and cable markets in the United Kingdom, Nigeria, Mexico, and internationally. The company has a P/E ratio of 15.88.

The average volume for Evolving Systems has been 54,800 shares per day over the past 30 days. Evolving Systems has a market cap of $61.3 million and is part of the computer software & services industry. Shares are down 4.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Evolving Systems

as a

hold

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

  • Net operating cash flow has slightly increased to -$0.24 million or 5.42% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -8.22%.
  • Despite currently having a low debt-to-equity ratio of 0.31, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that EVOL's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.84 is high and demonstrates strong liquidity.
  • 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 Software industry and the overall market on the basis of return on equity, EVOLVING SYSTEMS INC has outperformed in comparison with the industry average, but has underperformed when compared to that of 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 Software industry. The net income has significantly decreased by 66.0% when compared to the same quarter one year ago, falling from $1.68 million to $0.57 million.

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