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

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."

Arlington Asset Investment

Dividend Yield: 14.60%

Arlington Asset Investment (NYSE: AI) shares currently have a dividend yield of 14.60%.

Arlington Asset Investment Corp., an investment firm, acquires mortgage-related and other assets. The company has a P/E ratio of 82.76.

The average volume for Arlington Asset Investment has been 325,900 shares per day over the past 30 days. Arlington Asset Investment has a market cap of $548.7 million and is part of the real estate industry. Shares are down 9.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Arlington Asset Investment 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 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 $22.43 million or 13.20% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -34.43%.
  • AI, with its very weak revenue results, has greatly underperformed against the industry average of 9.3%. Since the same quarter one year prior, revenues plummeted by 75.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • ARLINGTON ASSET INVESTMENT has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ARLINGTON ASSET INVESTMENT reported lower earnings of $0.53 versus $2.96 in the prior year. This year, the market expects an improvement in earnings ($4.90 versus $0.53).
  • 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. Compared to other companies in the Capital Markets industry and the overall market, ARLINGTON ASSET INVESTMENT's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of ARLINGTON ASSET INVESTMENT has not done very well: it is down 6.84% 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. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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Mesa Royalty

Dividend Yield: 8.80%

Mesa Royalty (NYSE: MTR) shares currently have a dividend yield of 8.80%.

Mesa Royalty Trust holds net overriding royalty interests in various oil and gas properties in the United States. It has interests in properties located in the Hugoton field of Kansas; the San Juan Basin field of New Mexico and Colorado; and the Yellow Creek field of Wyoming. The company has a P/E ratio of 6.45.

The average volume for Mesa Royalty has been 7,600 shares per day over the past 30 days. Mesa Royalty has a market cap of $41.1 million and is part of the financial services industry. Shares are down 14.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Mesa Royalty as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. 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:
  • MTR's very impressive revenue growth greatly exceeded the industry average of 19.6%. Since the same quarter one year prior, revenues leaped by 97.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MTR 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 3.32, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for MESA ROYALTY TRUST is currently very high, coming in at 100.00%. MTR has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, MTR's net profit margin of 97.95% significantly outperformed against the industry.
  • MESA ROYALTY TRUST reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, MESA ROYALTY TRUST reported lower earnings of $1.85 versus $1.93 in the prior year.
  • MTR has underperformed the S&P 500 Index, declining 19.82% 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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Hercules Technology Growth Capital

Dividend Yield: 9.00%

Hercules Technology Growth Capital (NYSE: HTGC) shares currently have a dividend yield of 9.00%.

Hercules Technology Growth Capital, Inc. The company has a P/E ratio of 11.69.

The average volume for Hercules Technology Growth Capital has been 400,700 shares per day over the past 30 days. Hercules Technology Growth Capital has a market cap of $893.0 million and is part of the real estate industry. Shares are down 7.3% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Hercules Technology Growth Capital as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth 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 disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 9.3%. Since the same quarter one year prior, revenues rose by 11.0%. 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.
  • The gross profit margin for HERCULES TECH GROWTH CAP INC is currently very high, coming in at 78.47%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, HTGC's net profit margin of 55.95% significantly outperformed against the industry.
  • In its most recent trading session, HTGC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Capital Markets industry and the overall market, HERCULES TECH GROWTH CAP INC's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $7.58 million or 92.33% 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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