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."

Main Street Capital

Dividend Yield: 7.80%

Main Street Capital (NYSE: MAIN) shares currently have a dividend yield of 7.80%.

Main Street Capital Corporation is a business development company specializing in long- term equity and debt investments in small and lower middle market companies. The company has a P/E ratio of 12.54.

The average volume for Main Street Capital has been 342,600 shares per day over the past 30 days. Main Street Capital has a market cap of $1.4 billion and is part of the financial services industry. Shares are down 4.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Main Street Capital as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, weak operating cash flow and a decline in the stock price during the past year.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 4.3%. Since the same quarter one year prior, revenues rose by 17.2%. 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.
  • The gross profit margin for MAIN STREET CAPITAL CORP is currently very high, coming in at 84.88%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 48.50% significantly outperformed against the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, MAIN STREET CAPITAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • MAIN STREET CAPITAL CORP's earnings per share declined by 14.6% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, MAIN STREET CAPITAL CORP reported lower earnings of $2.33 versus $2.66 in the prior year. For the next year, the market is expecting a contraction of 6.4% in earnings ($2.18 versus $2.33).
  • Net operating cash flow has significantly decreased to -$104.24 million or 413.09% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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Seagate Technology

Dividend Yield: 8.20%

Seagate Technology (NASDAQ: STX) shares currently have a dividend yield of 8.20%.

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 24.40.

The average volume for Seagate Technology has been 5,501,800 shares per day over the past 30 days. Seagate Technology has a market cap of $9.1 billion and is part of the computer hardware industry. Shares are down 15.2% year-to-date as of the close of trading on Wednesday.

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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 47.3% in earnings ($2.75 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 45.89%, 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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Omega Healthcare Investors

Dividend Yield: 7.40%

Omega Healthcare Investors (NYSE: OHI) shares currently have a dividend yield of 7.40%.

Omega Healthcare Investors, Inc. is a real estate investment firm. The firm invests in the real estate markets of United States. It invests in healthcare facilities, primarily in long-term healthcare facilities in order to create its portfolio. Omega Healthcare Investors, Inc. The company has a P/E ratio of 24.04.

The average volume for Omega Healthcare Investors has been 1,577,600 shares per day over the past 30 days. Omega Healthcare Investors has a market cap of $5.8 billion and is part of the real estate industry. Shares are down 11.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Omega Healthcare Investors as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • OHI's very impressive revenue growth greatly exceeded the industry average of 6.8%. Since the same quarter one year prior, revenues leaped by 60.4%. 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 net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry average. The net income increased by 6.4% when compared to the same quarter one year prior, going from $56.99 million to $60.64 million.
  • The gross profit margin for OMEGA HEALTHCARE INVS INC is rather high; currently it is at 66.09%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, OHI's net profit margin of 28.79% compares favorably to 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 26.02%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 27.27% 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.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, OMEGA HEALTHCARE INVS INC's return on equity is below that of both the industry average and the S&P 500.

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