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."

Starwood Property

Dividend Yield: 10.50%

Starwood Property (NYSE: STWD) shares currently have a dividend yield of 10.50%.

Starwood Property Trust, Inc. originates, acquires, finances, and manages commercial mortgage loans, other commercial real estate debt investments, commercial mortgage-backed securities, and other commercial real estate-related debt investments in the United States and Europe. The company has a P/E ratio of 9.76.

The average volume for Starwood Property has been 2,309,300 shares per day over the past 30 days. Starwood Property has a market cap of $4.4 billion and is part of the real estate industry. Shares are down 14.7% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Starwood Property 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 deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • STWD's revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 6.8%. 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.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income has significantly decreased by 29.3% when compared to the same quarter one year ago, falling from $165.04 million to $116.74 million.
  • 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, STARWOOD PROPERTY TRUST INC's return on equity is below that of both the industry average and the S&P 500.

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Rayonier

Dividend Yield: 5.30%

Rayonier (NYSE: RYN) shares currently have a dividend yield of 5.30%.

Rayonier Inc. operates as an investment arm of Rayonier TRS Operating Company. Rayonier, Inc. engages in the sale and development of real estate and timberland management, as well as in the production and sale of cellulose fibers in the United States, New Zealand, and Australia. The company has a P/E ratio of 54.23.

The average volume for Rayonier has been 696,600 shares per day over the past 30 days. Rayonier has a market cap of $2.3 billion and is part of the materials & construction industry. Shares are down 16.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Rayonier as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 1.2%. 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.
  • 44.56% is the gross profit margin for RAYONIER INC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, RYN's net profit margin of 12.96% significantly trails the industry average.
  • Net operating cash flow has slightly increased to $57.52 million or 5.86% when compared to the same quarter last year. Despite an increase in cash flow, RAYONIER INC's average is still marginally south of the industry average growth rate of 9.39%.
  • RAYONIER INC's earnings per share declined by 36.0% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, RAYONIER INC reported lower earnings of $0.43 versus $0.80 in the prior year. For the next year, the market is expecting a contraction of 11.6% in earnings ($0.38 versus $0.43).
  • 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 39.9% when compared to the same quarter one year ago, falling from $32.70 million to $19.67 million.

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CBL & Associates Properties

Dividend Yield: 9.90%

CBL & Associates Properties (NYSE: CBL) shares currently have a dividend yield of 9.90%.

CBL & Associates Properties, Inc. is a public real estate investment trust. It engages in acquisition, development, and management of properties. The fund invests in the real estate markets of United States. Its portfolio consists of enclosed malls and open-air centers. The company has a P/E ratio of 11.65.

The average volume for CBL & Associates Properties has been 1,572,800 shares per day over the past 30 days. CBL & Associates Properties has a market cap of $1.8 billion and is part of the real estate industry. Shares are down 12.9% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates CBL & Associates Properties as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in 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:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 1.5%. 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.
  • 41.72% is the gross profit margin for CBL & ASSOCIATES PPTYS INC which we consider to be strong. Regardless of CBL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CBL's net profit margin of 14.06% is significantly lower than the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 47.09%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 31.81% compared to 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.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income has decreased by 23.9% when compared to the same quarter one year ago, dropping from $49.34 million to $37.57 million.

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