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."

Seagate Technology

Dividend Yield: 8.30%

Seagate Technology (NASDAQ: STX) shares currently have a dividend yield of 8.30%.

Seagate Technology Public Limited Company designs, manufactures, and sells electronic data storage products in the Asia Pacific, the Americas, and EMEA countries. The company has a P/E ratio of 24.22.

The average volume for Seagate Technology has been 5,120,400 shares per day over the past 30 days. Seagate Technology has a market cap of $9.0 billion and is part of the computer hardware industry. Shares are down 12.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Seagate Technology as a hold. The company's strongest point has been its a solid financial position based on a variety of debt and liquidity measures that we have looked at. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and poor profit margins.

Highlights from the ratings report include:
  • STX, with its decline in revenue, underperformed when compared the industry average of 2.7%. Since the same quarter one year prior, revenues fell by 19.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • SEAGATE TECHNOLOGY PLC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SEAGATE TECHNOLOGY PLC increased its bottom line by earning $5.22 versus $4.52 in the prior year. For the next year, the market is expecting a contraction of 46.5% in earnings ($2.80 versus $5.22).
  • The debt-to-equity ratio is very high at 2.27 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, STX's quick ratio is somewhat strong at 1.05, demonstrating the ability to handle short-term liquidity needs.
  • 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 Computers & Peripherals industry. The net income has significantly decreased by 82.4% when compared to the same quarter one year ago, falling from $933.00 million to $164.00 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 50.52%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 80.21% 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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HCP

Dividend Yield: 6.30%

HCP (NYSE: HCP) shares currently have a dividend yield of 6.30%.

HCP, Inc. is an independent hybrid real estate investment trust. The fund invests in real estate markets of the United States. The company has a P/E ratio of 73.28.

The average volume for HCP has been 3,872,600 shares per day over the past 30 days. HCP has a market cap of $17.0 billion and is part of the real estate industry. Shares are down 6.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates HCP as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. 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:
  • HCP's revenue growth has slightly outpaced the industry average of 6.3%. Since the same quarter one year prior, revenues slightly increased by 9.8%. 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 gross profit margin for HCP INC is rather high; currently it is at 53.74%. Regardless of HCP'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 17.31% trails the industry average.
  • Net operating cash flow has declined marginally to $273.67 million or 0.59% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, HCP INC has marginally lower results.
  • HCP INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, HCP INC reported lower earnings of $1.95 versus $1.97 in the prior year. For the next year, the market is expecting a contraction of 68.7% in earnings ($0.61 versus $1.95).
  • 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 53.4% when compared to the same quarter one year ago, falling from $247.65 million to $115.36 million.

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RR Donnelley & Sons

Dividend Yield: 7.70%

RR Donnelley & Sons (NASDAQ: RRD) shares currently have a dividend yield of 7.70%.

R.R. Donnelley & Sons Company provides integrated communications solutions to private and public sector clients in the United States and internationally. The company operates through Publishing and Retail Services, Variable Print, Strategic Services, and International segments. The company has a P/E ratio of 27.41.

The average volume for RR Donnelley & Sons has been 1,520,400 shares per day over the past 30 days. RR Donnelley & Sons has a market cap of $2.8 billion and is part of the diversified services industry. Shares are down 7.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates RR Donnelley & Sons as a hold. Among the primary strengths of the company is its reasonable valuation levels, considering its current price compared to earnings, book value and other measures. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.0%. Since the same quarter one year prior, revenues slightly dropped by 4.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • DONNELLEY (R R) & SONS CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, DONNELLEY (R R) & SONS CO reported lower earnings of $0.58 versus $1.15 in the prior year. This year, the market expects an improvement in earnings ($1.49 versus $0.58).
  • 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 Commercial Services & Supplies industry. The net income has significantly decreased by 77.0% when compared to the same quarter one year ago, falling from $62.20 million to $14.30 million.
  • The debt-to-equity ratio is very high at 5.67 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, RRD maintains a poor quick ratio of 0.95, which illustrates the inability to avoid short-term cash problems.

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