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."

Williams Companies

Dividend Yield: 10.80%

Williams Companies (NYSE: WMB) shares currently have a dividend yield of 10.80%.

The Williams Companies, Inc. operates as an energy infrastructure company primarily in the United States. The company operates in three segments: Williams Partners, Access Midstream, and Williams NGL & Petchem Services.

The average volume for Williams Companies has been 9,723,700 shares per day over the past 30 days. Williams Companies has a market cap of $17.8 billion and is part of the energy industry. Shares are down 52.1% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Williams Companies as a hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations 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 generally higher debt management risk.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 74.78% to $603.00 million when compared to the same quarter last year. In addition, WILLIAMS COS INC has also vastly surpassed the industry average cash flow growth rate of -26.70%.
  • The gross profit margin for WILLIAMS COS INC is rather high; currently it is at 53.92%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -2.22% trails the industry average.
  • Despite the weak revenue results, WMB has outperformed against the industry average of 36.9%. Since the same quarter one year prior, revenues fell by 13.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, WILLIAMS COS INC's return on equity is below that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.68%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 102.25% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.

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Sabra Health Care REIT

Dividend Yield: 8.30%

Sabra Health Care REIT (NASDAQ: SBRA) shares currently have a dividend yield of 8.30%.

Sabra Health Care REIT, Inc. operates as a real estate investment trust in the United States. The company, through its subsidiaries, owns and invests in real estate properties for the healthcare industry. The company has a P/E ratio of 17.01.

The average volume for Sabra Health Care REIT has been 508,900 shares per day over the past 30 days. Sabra Health Care REIT has a market cap of $1.3 billion and is part of the real estate industry. Shares are down 35.3% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Sabra Health Care REIT as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 36.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • SABRA HEALTH CARE REIT INC's earnings per share declined by 22.6% 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, SABRA HEALTH CARE REIT INC increased its bottom line by earning $0.69 versus $0.67 in the prior year. This year, the market expects an improvement in earnings ($1.06 versus $0.69).
  • Looking at the price performance of SBRA's shares over the past 12 months, there is not much good news to report: the stock is down 31.47%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • Net operating cash flow has decreased to $27.81 million or 34.28% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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Spectra Energy

Dividend Yield: 6.50%

Spectra Energy (NYSE: SE) shares currently have a dividend yield of 6.50%.

Spectra Energy Corp, through its subsidiaries, owns and operates a portfolio of natural gas-related energy assets in North America. The company has a P/E ratio of 19.95.

The average volume for Spectra Energy has been 5,910,000 shares per day over the past 30 days. Spectra Energy has a market cap of $15.4 billion and is part of the energy industry. Shares are down 39.5% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Spectra Energy as a hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The gross profit margin for SPECTRA ENERGY CORP is rather high; currently it is at 52.31%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.77% significantly outperformed against the industry average.
  • Net operating cash flow has slightly increased to $367.00 million or 8.90% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -26.70%.
  • Despite the weak revenue results, SE has outperformed against the industry average of 36.9%. Since the same quarter one year prior, revenues slightly dropped by 8.6%. The declining revenue appears to have seeped down to the company's 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 Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, SPECTRA ENERGY CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Currently the debt-to-equity ratio of 1.91 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.35, which clearly demonstrates the inability to cover short-term cash needs.

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