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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."

USA Compression Partners

Dividend Yield: 15.60%

USA Compression Partners

(NYSE:

USAC

) shares currently have a dividend yield of 15.60%.

USA Compression Partners, LP provides natural gas compression services under term contracts with customers in the oil and gas industry in the United States. It engineers, designs, operates, services, and repairs its compression units and maintains related support inventory and equipment. The company has a P/E ratio of 67.40.

The average volume for USA Compression Partners has been 164,400 shares per day over the past 30 days. USA Compression Partners has a market cap of $441.7 million and is part of the energy industry. Shares are down 13.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

USA Compression Partners

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TheStreet Recommends

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, 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, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 22.5%. Since the same quarter one year prior, revenues rose by 24.6%. 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 57.57% to $34.04 million when compared to the same quarter last year. In addition, USA COMPRESSION PRTNRS LP has also vastly surpassed the industry average cash flow growth rate of -14.19%.
  • The debt-to-equity ratio is somewhat low, currently at 0.92, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.44 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • 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 Energy Equipment & Services industry and the overall market, USA COMPRESSION PRTNRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 36.07%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 288.88% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, USAC is still more expensive than most of the other companies in its industry.

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Seaspan

Dividend Yield: 10.00%

Seaspan

(NYSE:

SSW

) shares currently have a dividend yield of 10.00%.

Seaspan Corporation operates as an independent charter owner and manager of containerships in Hong Kong. The company charters its containerships pursuant to long-term, fixed-rate time charters to various container liner companies. The company has a P/E ratio of 3.75.

The average volume for Seaspan has been 210,400 shares per day over the past 30 days. Seaspan has a market cap of $1.5 billion and is part of the transportation industry. Shares are down 15% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Seaspan

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and generally higher debt management risk.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 11.4%. Since the same quarter one year prior, revenues rose by 14.5%. 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 Marine industry. The net income increased by 306.7% when compared to the same quarter one year prior, rising from $20.00 million to $81.36 million.
  • SEASPAN CORP reported significant earnings per share improvement 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, SEASPAN CORP reported lower earnings of $0.78 versus $2.94 in the prior year. This year, the market expects an improvement in earnings ($1.04 versus $0.78).
  • SSW'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 28.10%, 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.
  • The debt-to-equity ratio is very high at 2.06 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, SSW's quick ratio is somewhat strong at 1.19, demonstrating the ability to handle short-term liquidity needs.

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Blue Capital Reinsurance Holdings

Dividend Yield: 7.10%

Blue Capital Reinsurance Holdings

(NYSE:

BCRH

) shares currently have a dividend yield of 7.10%.

Blue Capital Reinsurance Holdings Ltd., through its subsidiaries, provides collateralized reinsurance in the property catastrophe market. The company was founded in 2013 and is headquartered in Pembroke, Bermuda. The company has a P/E ratio of 7.86.

The average volume for Blue Capital Reinsurance Holdings has been 15,500 shares per day over the past 30 days. Blue Capital Reinsurance Holdings has a market cap of $147.2 million and is part of the insurance industry. Shares are down 3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Blue Capital Reinsurance Holdings

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 find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • BCRH's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, BLUE CAP REINSURANCE has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • BCRH, with its decline in revenue, slightly underperformed the industry average of 12.2%. Since the same quarter one year prior, revenues fell by 13.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • After a year of stock price fluctuations, the net result is that BCRH's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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