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."

National Oilwell Varco

Dividend Yield: 4.60%

National Oilwell Varco (NYSE: NOV) shares currently have a dividend yield of 4.60%.

National Oilwell Varco, Inc. designs, manufactures, and sells equipment and components used in oil and gas drilling, completion, and production; and provides oilfield services to the upstream oil and gas industry worldwide. The company has a P/E ratio of 8.79.

The average volume for National Oilwell Varco has been 5,034,900 shares per day over the past 30 days. National Oilwell Varco has a market cap of $15.2 billion and is part of the energy industry. Shares are down 37.6% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates National Oilwell Varco 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 and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • NOV's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.06, which illustrates the ability to avoid short-term cash problems.
  • NOV, with its decline in revenue, slightly underperformed the industry average of 22.4%. Since the same quarter one year prior, revenues fell by 25.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for NATIONAL OILWELL VARCO INC is currently lower than what is desirable, coming in at 27.17%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 7.39% trails that of the industry average.
  • 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. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, NATIONAL OILWELL VARCO INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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MDU Resources Group

Dividend Yield: 4.30%

MDU Resources Group (NYSE: MDU) shares currently have a dividend yield of 4.30%.

MDU Resources Group, Inc. operates as a diversified natural resource company in the United States. The company's Electric segment generates, transmits, and distributes electricity in Montana, North Dakota, South Dakota, and Wyoming. The company has a P/E ratio of 12.06.

The average volume for MDU Resources Group has been 1,148,400 shares per day over the past 30 days. MDU Resources Group has a market cap of $3.3 billion and is part of the materials & construction industry. Shares are down 22.7% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates MDU Resources Group as a hold. The company's strongest point has been its expanding profit margins. At the same time, however, we also find weaknesses including deteriorating net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • MDU, with its decline in revenue, slightly underperformed the industry average of 7.6%. Since the same quarter one year prior, revenues slightly dropped by 9.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • MDU RESOURCES GROUP INC 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MDU RESOURCES GROUP INC increased its bottom line by earning $1.53 versus $1.46 in the prior year. For the next year, the market is expecting a contraction of 37.9% in earnings ($0.95 versus $1.53).
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 43.09%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 60.71% compared to the year-earlier quarter. 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.
  • 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 Multi-Utilities industry. The net income has significantly decreased by 524.4% when compared to the same quarter one year ago, falling from $54.11 million to -$229.60 million.
  • The gross profit margin for MDU RESOURCES GROUP INC is currently extremely low, coming in at 10.08%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -23.28% is significantly below that of the industry average.

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Royal Dutch Shell

Dividend Yield: 6.40%

Royal Dutch Shell (NYSE: RDS.B) shares currently have a dividend yield of 6.40%.

Royal Dutch Shell plc operates as an independent oil and gas company worldwide. It operates through Upstream and Downstream segments. The company explores for and extracts crude oil, natural gas, and natural gas liquids. The company has a P/E ratio of 7.44.

The average volume for Royal Dutch Shell has been 1,223,300 shares per day over the past 30 days. Royal Dutch Shell has a market cap of $188.0 billion and is part of the energy industry. Shares are down 14.9% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Royal Dutch Shell 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 and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • RDS.B's debt-to-equity ratio is very low at 0.30 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • RDS.B, with its decline in revenue, slightly underperformed the industry average of 34.8%. Since the same quarter one year prior, revenues fell by 34.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Net operating cash flow has decreased to $6,050.00 million or 29.98% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, ROYAL DUTCH SHELL PLC has marginally lower results.
  • 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ROYAL DUTCH SHELL PLC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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