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: 10.60%

MFA Financial (NYSE: MFA) shares currently have a dividend yield of 10.60%.

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 9.30.

The average volume for MFA Financial has been 2,095,300 shares per day over the past 30 days. MFA Financial has a market cap of $2.8 billion and is part of the real estate industry. Shares are down 5.9% 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 revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income 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 9.8%. Since the same quarter one year prior, revenues slightly increased by 4.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Net operating cash flow has slightly increased to $70.94 million or 6.35% 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 12.34%.
  • MFA has underperformed the S&P 500 Index, declining 9.58% 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, on the basis of change in net income 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 has decreased by 0.8% when compared to the same quarter one year ago, dropping from $78.73 million to $78.07 million.

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Garmin

Dividend Yield: 5.10%

Garmin (NASDAQ: GRMN) shares currently have a dividend yield of 5.10%.

Garmin Ltd., together with its subsidiaries, designs, develops, manufactures, and markets hand-held, wrist-based, and portable and fixed-mount global positioning system (GPS) enabled products; and other navigation, communication, and information products worldwide. The company has a P/E ratio of 28.57.

The average volume for Garmin has been 1,469,700 shares per day over the past 30 days. Garmin has a market cap of $7.7 billion and is part of the electronics industry. Shares are down 24.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Garmin 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 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:
  • GRMN 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. To add to this, GRMN has a quick ratio of 1.70, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for GARMIN LTD is rather high; currently it is at 55.81%. Regardless of GRMN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GRMN's net profit margin of 17.80% significantly outperformed against the industry.
  • GRMN, with its decline in revenue, underperformed when compared the industry average of 12.9%. Since the same quarter one year prior, revenues slightly dropped by 0.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Net operating cash flow has significantly decreased to -$97.36 million or 159.30% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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. In comparison to the other companies in the Household Durables industry and the overall market, GARMIN LTD'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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NuStar Energy L.P

Dividend Yield: 8.40%

NuStar Energy L.P (NYSE: NS) shares currently have a dividend yield of 8.40%.

NuStar Energy L.P. engages in the terminalling, storage, and marketing of petroleum products; and transportation of petroleum products and anhydrous ammonia primarily in the United States and the Netherlands. It operates through three segments: Pipeline, Storage, and Fuels Marketing. The company has a P/E ratio of 16.41.

The average volume for NuStar Energy L.P has been 305,800 shares per day over the past 30 days. NuStar Energy L.P has a market cap of $4.0 billion and is part of the energy industry. Shares are down 11.7% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates NuStar Energy L.P as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and notable return on equity. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, a generally disappointing performance in the stock itself and poor profit margins.

Highlights from the ratings report include:
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, NUSTAR ENERGY LP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, NS has underperformed the S&P 500 Index, declining 19.90% 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.
  • Currently the debt-to-equity ratio of 1.82 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated.

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