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: 4.90%

National Oilwell Varco (NYSE: NOV) shares currently have a dividend yield of 4.90%.

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 11.37.

The average volume for National Oilwell Varco has been 6,391,900 shares per day over the past 30 days. National Oilwell Varco has a market cap of $14.4 billion and is part of the energy industry. Shares are down 40.7% 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 reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. 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:
  • NOV's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 1.00 is somewhat weak and could be cause for future problems.
  • NOV, with its decline in revenue, slightly underperformed the industry average of 31.4%. Since the same quarter one year prior, revenues fell by 40.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 Energy Equipment & Services industry and the overall market on the basis of return on equity, NATIONAL OILWELL VARCO INC has outperformed in comparison with the industry average, but has underperformed when compared to 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 Energy Equipment & Services industry. The net income has significantly decreased by 77.8% when compared to the same quarter one year ago, falling from $699.00 million to $155.00 million.

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Retail Properties of America

Dividend Yield: 4.40%

Retail Properties of America (NYSE: RPAI) shares currently have a dividend yield of 4.40%.

Retail Properties of America, Inc. is a real estate investment trust. It engages in acquisition, development and management of properties. The trust invests in the real estate markets of United States. The company has a P/E ratio of 115.15.

The average volume for Retail Properties of America has been 970,600 shares per day over the past 30 days. Retail Properties of America has a market cap of $3.6 billion and is part of the real estate industry. Shares are down 8.3% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Retail Properties of America as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.2%. Since the same quarter one year prior, revenues slightly increased by 3.3%. 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 $71.86 million or 3.34% when compared to the same quarter last year. In addition, RETAIL PPTYS OF AMERICA INC has also vastly surpassed the industry average cash flow growth rate of -72.17%.
  • RETAIL PPTYS OF AMERICA INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, RETAIL PPTYS OF AMERICA INC turned its bottom line around by earning $0.15 versus -$0.20 in the prior year. This year, the market expects an improvement in earnings ($0.18 versus $0.15).
  • The gross profit margin for RETAIL PPTYS OF AMERICA INC is currently lower than what is desirable, coming in at 33.83%. Regardless of RPAI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 20.33% trails the industry average.
  • In its most recent trading session, RPAI 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, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

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Pattern Energy Group

Dividend Yield: 6.20%

Pattern Energy Group (NASDAQ: PEGI) shares currently have a dividend yield of 6.20%.

Pattern Energy Group Inc., an independent power company, owns and operates power projects in the United States, Canada, and Chile. As of September 3, 2015, the company owned interests in 16 wind power projects with the capacity of 2,282 megawatts.

The average volume for Pattern Energy Group has been 962,000 shares per day over the past 30 days. Pattern Energy Group has a market cap of $1.7 billion and is part of the utilities industry. Shares are down 4.5% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Pattern Energy Group as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 14.9%. Since the same quarter one year prior, revenues rose by 30.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Independent Power Producers & Energy Traders industry average. The net income increased by 27.8% when compared to the same quarter one year prior, rising from $11.20 million to $14.32 million.
  • PATTERN ENERGY GROUP INC has improved earnings per share by 5.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PATTERN ENERGY GROUP INC reported poor results of -$0.55 versus -$0.24 in the prior year. This year, the market expects an improvement in earnings (-$0.01 versus -$0.55).
  • The debt-to-equity ratio is very high at 2.42 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.22, which clearly demonstrates the inability to cover short-term cash needs.
  • 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 Independent Power Producers & Energy Traders industry and the overall market, PATTERN ENERGY GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.

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