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."

Old National Bancorp

Dividend Yield: 4.50%

Old National Bancorp (NASDAQ: ONB) shares currently have a dividend yield of 4.50%.

Old National Bancorp operates as the holding company for Old National Bank, which provides various financial services to individual and commercial customers in the United States. It operates in two segments, Banking and Insurance. The company has a P/E ratio of 11.49.

The average volume for Old National Bancorp has been 1,149,500 shares per day over the past 30 days. Old National Bancorp has a market cap of $1.3 billion and is part of the banking industry. Shares are down 14.3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Old National Bancorp as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share and increase in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.2%. Since the same quarter one year prior, revenues slightly increased by 5.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • OLD NATIONAL BANCORP has improved earnings per share by 8.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, OLD NATIONAL BANCORP increased its bottom line by earning $1.00 versus $0.95 in the prior year. This year, the market expects an improvement in earnings ($1.00 versus $1.00).
  • The gross profit margin for OLD NATIONAL BANCORP is currently very high, coming in at 93.88%. Regardless of ONB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ONB's net profit margin of 20.55% compares favorably to 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. When compared to other companies in the Commercial Banks industry and the overall market, OLD NATIONAL BANCORP's return on equity is below that of both the industry average and the S&P 500.
  • ONB has underperformed the S&P 500 Index, declining 20.52% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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Diamondrock Hospitality

Dividend Yield: 5.40%

Diamondrock Hospitality (NYSE: DRH) shares currently have a dividend yield of 5.40%.

DiamondRock Hospitality Company, a lodging focused real estate company, owns premium hotels and resorts in North America. The company has a P/E ratio of 21.56.

The average volume for Diamondrock Hospitality has been 2,819,900 shares per day over the past 30 days. Diamondrock Hospitality has a market cap of $1.9 billion and is part of the real estate industry. Shares are down 1.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Diamondrock Hospitality as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.3%. Since the same quarter one year prior, revenues slightly increased by 4.5%. 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.
  • DIAMONDROCK HOSPITALITY 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, DIAMONDROCK HOSPITALITY CO reported lower earnings of $0.43 versus $0.82 in the prior year. This year, the market expects an improvement in earnings ($0.59 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 59.6% when compared to the same quarter one year ago, falling from $63.62 million to $25.70 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, DIAMONDROCK HOSPITALITY CO's return on equity is below that of both the industry average and the S&P 500.

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Pennsylvania Real Estate Investment

Dividend Yield: 4.10%

Pennsylvania Real Estate Investment (NYSE: PEI) shares currently have a dividend yield of 4.10%.

Pennsylvania Real Estate Investment Trust (PREIT) is a publicly owned equity real estate investment trust. The firm manages owns, manages, develops, acquires, and leases mall and power and strip centers primarily in the Eastern United States.

The average volume for Pennsylvania Real Estate Investment has been 620,200 shares per day over the past 30 days. Pennsylvania Real Estate Investment has a market cap of $1.4 billion and is part of the real estate industry. Shares are down 5.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Pennsylvania Real Estate Investment as a hold. Among the primary strengths of the company is its revenue growth. At the same time, however, 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:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.3%. Since the same quarter one year prior, revenues slightly increased by 5.4%. 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.
  • PENNSYLVANIA RE INVS TRUST 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PENNSYLVANIA RE INVS TRUST reported poor results of -$1.94 versus -$0.44 in the prior year. This year, the market expects an improvement in earnings ($0.03 versus -$1.94).
  • The share price of PENNSYLVANIA RE INVS TRUST has not done very well: it is down 16.97% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • 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 316.2% when compared to the same quarter one year ago, falling from $18.46 million to -$39.91 million.
  • 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, PENNSYLVANIA RE INVS TRUST's return on equity significantly trails that of both the industry average and the S&P 500.

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