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."

MFA Financial

Dividend Yield: 10.10%

MFA Financial (NYSE: MFA) shares currently have a dividend yield of 10.10%.

MFA Financial, Inc., a real estate investment trust (REIT), invests in residential agency and non-agency mortgage-backed securities (MBS), and residential whole loans in the United States (the U.S.). The company has a P/E ratio of 9.81.

The average volume for MFA Financial has been 2,330,800 shares per day over the past 30 days. MFA Financial has a market cap of $2.9 billion and is part of the real estate industry. Shares are down 0.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates MFA Financial as a hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, 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 earnings per share has not been good.

Highlights from the ratings report include:
  • The gross profit margin for MFA FINANCIAL INC is currently very high, coming in at 89.72%. Regardless of MFA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MFA's net profit margin of 64.36% significantly outperformed against the industry.
  • Net operating cash flow has increased to $78.31 million or 10.36% when compared to the same quarter last year. Despite an increase in cash flow, MFA FINANCIAL INC's average is still marginally south of the industry average growth rate of 12.85%.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Real Estate Investment Trusts (REITs) industry average, but is greater than that of the S&P 500. The net income increased by 1.5% when compared to the same quarter one year prior, going from $78.56 million to $79.71 million.
  • MFA FINANCIAL INC reported flat earnings per share in the most recent quarter. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, MFA FINANCIAL INC increased its bottom line by earning $0.80 versus $0.79 in the prior year. For the next year, the market is expecting a contraction of 2.5% in earnings ($0.78 versus $0.80).

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Potash Corp of Saskatchewan

Dividend Yield: 4.70%

Potash Corp of Saskatchewan (NYSE: POT) shares currently have a dividend yield of 4.70%.

Potash Corporation of Saskatchewan Inc., together with its subsidiaries, produces and sells fertilizers and related industrial and feed products worldwide. The company operates in three segments: Potash, Nitrogen, and Phosphate. The company has a P/E ratio of 17.81.

The average volume for Potash Corp of Saskatchewan has been 3,776,400 shares per day over the past 30 days. Potash Corp of Saskatchewan has a market cap of $27.0 billion and is part of the chemicals industry. Shares are down 8% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Potash Corp of Saskatchewan as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and expanding profit margins. 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 came in higher than the industry average of 6.3%. Since the same quarter one year prior, revenues rose by 23.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 44.48% is the gross profit margin for POTASH CORP SASK INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.39% significantly outperformed against the industry average.
  • The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that POT's debt-to-equity ratio is low, the quick ratio, which is currently 0.57, displays a potential problem in covering short-term cash needs.
  • POT has underperformed the S&P 500 Index, declining 5.43% 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.
  • 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 Chemicals industry and the overall market on the basis of return on equity, POTASH CORP SASK INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

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FirstEnergy

Dividend Yield: 4.10%

FirstEnergy (NYSE: FE) shares currently have a dividend yield of 4.10%.

FirstEnergy Corp., through its subsidiaries, generates, transmits, and distributes electricity in the United States. The company operates through Regulated Distribution, Regulated Transmission, and Competitive Energy Services segments. The company has a P/E ratio of 69.59.

The average volume for FirstEnergy has been 3,691,100 shares per day over the past 30 days. FirstEnergy has a market cap of $15.0 billion and is part of the utilities industry. Shares are down 8.9% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates FirstEnergy as a hold. The company's strongest point has been its strong cash flow from operations. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • FE, with its decline in revenue, underperformed when compared the industry average of 10.5%. Since the same quarter one year prior, revenues slightly dropped by 4.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • FIRSTENERGY CORP 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, FIRSTENERGY CORP reported lower earnings of $0.50 versus $0.90 in the prior year. This year, the market expects an improvement in earnings ($2.60 versus $0.50).
  • In its most recent trading session, FE 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. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • 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 Electric Utilities industry and the overall market on the basis of return on equity, FIRSTENERGY CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for FIRSTENERGY CORP is currently extremely low, coming in at 1.55%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -8.78% is significantly below that of the industry average.

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