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."

Western Refining

Dividend Yield: 5.30%

Western Refining (NYSE: WNR) shares currently have a dividend yield of 5.30%.

Western Refining, Inc. operates as an independent crude oil refiner and marketer of refined products. The company operates through four segments: Refining, NTI, WNRL, and Retail. The company has a P/E ratio of 6.67.

The average volume for Western Refining has been 2,653,100 shares per day over the past 30 days. Western Refining has a market cap of $2.6 billion and is part of the energy industry. Shares are down 20.9% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Western Refining as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels 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, deteriorating net income and poor profit margins.

Highlights from the ratings report include:
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 34.6%. Since the same quarter one year prior, revenues fell by 31.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • WESTERN REFINING 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, WESTERN REFINING INC reported lower earnings of $4.26 versus $5.61 in the prior year. For the next year, the market is expecting a contraction of 39.2% in earnings ($2.59 versus $4.26).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 89.7% when compared to the same quarter one year ago, falling from $130.94 million to $13.55 million.

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M.D.C. Holdings

Dividend Yield: 4.10%

M.D.C. Holdings (NYSE: MDC) shares currently have a dividend yield of 4.10%.

M.D.C. Holdings, Inc., through its subsidiaries, engages in homebuilding and financial services businesses in the United States. The company has a P/E ratio of 18.10.

The average volume for M.D.C. Holdings has been 829,600 shares per day over the past 30 days. M.D.C. Holdings has a market cap of $1.2 billion and is part of the materials & construction industry. Shares are down 6.3% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates M.D.C. Holdings 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 also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 2.2%. Since the same quarter one year prior, revenues rose by 14.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MDC HOLDINGS INC reported significant earnings per share improvement 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, MDC HOLDINGS INC increased its bottom line by earning $1.34 versus $1.29 in the prior year. This year, the market expects an improvement in earnings ($2.10 versus $1.34).
  • MDC's debt-to-equity ratio of 0.75 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.
  • MDC has underperformed the S&P 500 Index, declining 9.78% from its price level of one year ago. 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 gross profit margin for MDC HOLDINGS INC is rather low; currently it is at 17.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.90% trails that of the industry average.

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HCP

Dividend Yield: 7.00%

HCP (NYSE: HCP) shares currently have a dividend yield of 7.00%.

HCP, Inc. is an independent hybrid real estate investment trust. The fund invests in real estate markets of the United States.

The average volume for HCP has been 4,588,400 shares per day over the past 30 days. HCP has a market cap of $15.2 billion and is part of the real estate industry. Shares are down 14.7% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates HCP 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 weak operating cash flow.

Highlights from the ratings report include:
  • HCP's revenue growth has slightly outpaced the industry average of 7.9%. Since the same quarter one year prior, revenues rose by 12.7%. 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.
  • 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. 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, HCP INC swung to a loss, reporting -$1.20 versus $1.95 in the prior year. This year, the market expects an improvement in earnings ($1.66 versus -$1.20).
  • The share price of HCP INC has not done very well: it is down 21.96% 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.
  • 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, HCP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $354.49 million or 3.03% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, HCP INC has marginally lower results.

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