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."

World Point Terminals

Dividend Yield: 8.10%

World Point Terminals

(NYSE:

WPT

) shares currently have a dividend yield of 8.10%.

World Point Terminals, LP owns, operates, develops, and acquires terminals and other assets for the storage of light refined products, heavy refined products, and crude oil in the East Coast, Gulf Coast, and Midwest regions of the United States. The company has a P/E ratio of 15.35.

The average volume for World Point Terminals has been 30,900 shares per day over the past 30 days. World Point Terminals has a market cap of $270.9 million and is part of the energy industry. Shares are down 28.8% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

World Point Terminals

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures 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 disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 34.6%. Since the same quarter one year prior, revenues slightly increased by 9.0%. 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.
  • WPT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.03, which clearly demonstrates the ability to cover short-term cash needs.
  • WORLD POINT TERMINALS's earnings per share declined by 7.4% 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, WORLD POINT TERMINALS increased its bottom line by earning $0.98 versus $0.76 in the prior year. This year, the market expects an improvement in earnings ($1.00 versus $0.98).
  • 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 Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, WORLD POINT TERMINALS has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, WPT has underperformed the S&P 500 Index, declining 22.39% 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.

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FS Investment

Dividend Yield: 8.80%

FS Investment

(NYSE:

FSIC

) shares currently have a dividend yield of 8.80%.

FS Investment Corporation is a business development company specializing in investments in debt securities. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments. The company has a P/E ratio of 9.97.

The average volume for FS Investment has been 736,500 shares per day over the past 30 days. FS Investment has a market cap of $2.5 billion and is part of the financial services industry. Shares are up 1.8% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

TheStreet Recommends

FS Investment

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 6.7%. Since the same quarter one year prior, revenues rose by 22.4%. 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 FS INVESTMENT CORP is currently very high, coming in at 76.20%. It has increased significantly from the same period last year. Along with this, the net profit margin of 35.00% significantly outperformed against the industry average.
  • When compared to other companies in the Capital Markets industry and the overall market, FS INVESTMENT CORP's return on equity is below that of both the industry average and the S&P 500.
  • After a year of stock price fluctuations, the net result is that FSIC'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. 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, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Capital Markets industry average. The net income has significantly decreased by 25.4% when compared to the same quarter one year ago, falling from $69.31 million to $51.71 million.

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CM Finance

Dividend Yield: 12.80%

CM Finance

(NASDAQ:

CMFN

) shares currently have a dividend yield of 12.80%.

CM Finance Inc. is a business development company. The company has a P/E ratio of 7.74.

The average volume for CM Finance has been 34,300 shares per day over the past 30 days. CM Finance has a market cap of $148.2 million and is part of the financial services industry. Shares are down 1.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

CM Finance

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and notable return on equity. 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:

  • CMFN's very impressive revenue growth greatly exceeded the industry average of 6.7%. Since the same quarter one year prior, revenues leaped by 74.4%. 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 CM FINANCE INC is rather high; currently it is at 65.81%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, CMFN's net profit margin of 40.50% significantly outperformed against the industry.
  • When compared to other companies in the Capital Markets industry and the overall market, CM FINANCE INC's return on equity is below that of both the industry average and the S&P 500.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, CMFN has underperformed the S&P 500 Index, declining 20.18% 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.
  • Net operating cash flow has significantly decreased to -$10.57 million or 867.67% 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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