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 or Stephanie Link.

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."

Town Sports International Holdings

Dividend Yield: 7.60%

Town Sports International Holdings (NASDAQ: CLUB) shares currently have a dividend yield of 7.60%.

Town Sports International Holdings, Inc., together with its subsidiaries, owns and operates fitness clubs in the Northeast and Mid-Atlantic regions of the United States. The company has a P/E ratio of 17.98.

The average volume for Town Sports International Holdings has been 139,600 shares per day over the past 30 days. Town Sports International Holdings has a market cap of $203.9 million and is part of the leisure industry. Shares are down 43.8% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Town Sports International Holdings as a hold. Among the primary strengths of the company is its generally strong cash flow from operations. At the same time, however, we also find weaknesses including unimpressive growth in net income, poor profit margins and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • Net operating cash flow has slightly increased to $16.91 million or 4.97% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -33.04%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.4%. Since the same quarter one year prior, revenues slightly dropped by 0.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The share price of TOWN SPORTS INTL HOLDINGS has not done very well: it is down 7.28% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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 significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 53.4% when compared to the same quarter one year ago, falling from -$0.45 million to -$0.70 million.
  • The gross profit margin for TOWN SPORTS INTL HOLDINGS is rather low; currently it is at 21.89%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.61% is significantly below that of the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Diana Containerships

Dividend Yield: 15.70%

Diana Containerships (NASDAQ: DCIX) shares currently have a dividend yield of 15.70%.

Diana Containerships Inc., a shipping company, owns and operates containerships. It is involved in the seaborne transportation activities. As of August 23, 2013, its fleet consisted of nine container vessels comprising one Post-Panamax and eight Panamax vessels.

The average volume for Diana Containerships has been 212,000 shares per day over the past 30 days. Diana Containerships has a market cap of $129.5 million and is part of the transportation industry. Shares are down 5.7% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Diana Containerships as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. 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:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.6%. Since the same quarter one year prior, revenues slightly increased by 5.9%. 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 DIANA CONTAINERSHIPS INC is rather high; currently it is at 51.68%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -127.62% is in-line with the industry average.
  • Net operating cash flow has increased to $9.67 million or 40.22% when compared to the same quarter last year. Despite an increase in cash flow, DIANA CONTAINERSHIPS INC's cash flow growth rate is still lower than the industry average growth rate of 70.00%.
  • 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 Marine industry. The net income has significantly decreased by 7400.4% when compared to the same quarter one year ago, falling from $0.27 million to -$19.78 million.
  • 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 Marine industry and the overall market, DIANA CONTAINERSHIPS INC's return on equity significantly trails that of both the industry average and the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

MCG Capital Corporation

Dividend Yield: 13.30%

MCG Capital Corporation (NASDAQ: MCGC) shares currently have a dividend yield of 13.30%.

MCG Capital Corporation is a private equity firm specializing in investments in middle market companies. The firm does not prefer investments in highly cyclical and volatile industry sectors and businesses with significant volatility exposure. It seeks to invest in small to mid sized companies. The company has a P/E ratio of 182.50.

The average volume for MCG Capital Corporation has been 621,900 shares per day over the past 30 days. MCG Capital Corporation has a market cap of $264.4 million and is part of the financial services industry. Shares are down 13.6% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates MCG Capital Corporation as a hold. The company's strengths can be seen in multiple areas, such as its 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:
  • Net operating cash flow has significantly increased by 146.75% to $11.85 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 123.99%.
  • The gross profit margin for MCG CAPITAL CORP is currently very high, coming in at 77.14%. 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 -164.94% is in-line with the industry average.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 16.8%. Since the same quarter one year prior, revenues fell by 16.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 Capital Markets industry and the overall market, MCG CAPITAL CORP'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 25.98%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 388.88% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Other helpful dividend tools from TheStreet:

null