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."

Guess

Dividend Yield: 4.20%

Guess (NYSE: GES) shares currently have a dividend yield of 4.20%.

Guess , Inc. designs, markets, distributes, and licenses lifestyle collections of contemporary apparel and accessories for men, women, and children that reflect the American lifestyle and European fashion sensibilities. The company has a P/E ratio of 18.02.

The average volume for Guess has been 1,334,000 shares per day over the past 30 days. Guess has a market cap of $1.8 billion and is part of the retail industry. Shares are up 1.4% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Guess as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, 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 disappointing return on equity, a generally disappointing performance in the stock itself and poor profit margins.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 259.0% when compared to the same quarter one year prior, rising from -$2.10 million to $3.34 million.
  • GES's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, GES has a quick ratio of 2.30, which demonstrates the ability of the company to cover short-term liquidity needs.
  • GES, with its decline in revenue, underperformed when compared the industry average of 8.7%. Since the same quarter one year prior, revenues slightly dropped by 8.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • GES has underperformed the S&P 500 Index, declining 15.58% 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. In comparison to the other companies in the Specialty Retail industry and the overall market, GUESS 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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Coach

Dividend Yield: 4.20%

Coach (NYSE: COH) shares currently have a dividend yield of 4.20%.

Coach, Inc. provides luxury accessories and lifestyle collections for women and men in the United States and internationally. The company has a P/E ratio of 16.63.

The average volume for Coach has been 4,333,100 shares per day over the past 30 days. Coach has a market cap of $8.8 billion and is part of the consumer non-durables industry. Shares are down 14.8% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Coach as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. 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 currently having a low debt-to-equity ratio of 0.36, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that COH's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.09 is high and demonstrates strong liquidity.
  • The gross profit margin for COACH INC is rather high; currently it is at 68.94%. Regardless of COH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.16% trails the industry average.
  • 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 Textiles, Apparel & Luxury Goods industry and the overall market on the basis of return on equity, COACH INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • 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 Textiles, Apparel & Luxury Goods industry. The net income has significantly decreased by 84.5% when compared to the same quarter one year ago, falling from $75.28 million to $11.70 million.

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Chimera Investment

Dividend Yield: 13.60%

Chimera Investment (NYSE: CIM) shares currently have a dividend yield of 13.60%.

Chimera Investment Corporation operates as a real estate investment trust in the United States. The company has a P/E ratio of 5.14.

The average volume for Chimera Investment has been 2,010,100 shares per day over the past 30 days. Chimera Investment has a market cap of $2.9 billion and is part of the real estate industry. Shares are down 11.1% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Chimera Investment as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and growth in earnings per share. 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:
  • The revenue growth came in higher than the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 38.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for CHIMERA INVESTMENT CORP is currently very high, coming in at 72.80%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, CIM's net profit margin of 61.72% significantly outperformed against the industry.
  • CHIMERA INVESTMENT CORP has improved earnings per share by 14.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, CHIMERA INVESTMENT CORP increased its bottom line by earning $2.90 versus $1.75 in the prior year. For the next year, the market is expecting a contraction of 20.7% in earnings ($2.30 versus $2.90).
  • 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 10.9% when compared to the same quarter one year prior, going from $104.77 million to $116.19 million.
  • CIM has underperformed the S&P 500 Index, declining 13.05% 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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