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."

CenturyLink

Dividend Yield: 8.00%

CenturyLink (NYSE: CTL) shares currently have a dividend yield of 8.00%.

CenturyLink, Inc. provides various communications services to residential, business, wholesale, and governmental customers in the United States. It operates through two segments, Business and Consumer. The company has a P/E ratio of 16.14.

The average volume for CenturyLink has been 5,057,200 shares per day over the past 30 days. CenturyLink has a market cap of $14.8 billion and is part of the telecommunications industry. Shares are up 6.9% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates CenturyLink as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income 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 and generally higher debt management risk.

Highlights from the ratings report include:
  • CENTURYLINK INC has improved earnings per share by 29.4% 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CENTURYLINK INC increased its bottom line by earning $1.59 versus $1.35 in the prior year. This year, the market expects an improvement in earnings ($2.59 versus $1.59).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Diversified Telecommunication Services industry average. The net income increased by 22.9% when compared to the same quarter one year prior, going from $192.00 million to $236.00 million.
  • The gross profit margin for CENTURYLINK INC is rather high; currently it is at 56.87%. Regardless of CTL'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 5.36% trails the industry average.
  • Even though the current debt-to-equity ratio is 1.43, it is still below the industry average, suggesting that this level of debt is acceptable within the Diversified Telecommunication Services industry. Despite the fact that CTL's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.60 is low and demonstrates weak liquidity.
  • CTL has underperformed the S&P 500 Index, declining 20.75% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

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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 4,094,000 shares per day over the past 30 days. HCP has a market cap of $15.4 billion and is part of the real estate industry. Shares are down 13.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates HCP as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 148.3% when compared to the same quarter one year prior, rising from -$240.61 million to $116.12 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.9%. Since the same quarter one year prior, revenues slightly increased by 2.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • HCP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth 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 ($1.40 versus -$1.20).
  • HCP has underperformed the S&P 500 Index, declining 16.47% 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.
  • 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. 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.

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ONEOK

Dividend Yield: 5.70%

ONEOK (NYSE: OKE) shares currently have a dividend yield of 5.70%.

ONEOK, Inc., through its general partner interests in ONEOK Partners, L.P., engages in the gathering, processing, storage, and transportation of natural gas in the United States. The company has a P/E ratio of 33.27.

The average volume for ONEOK has been 2,874,300 shares per day over the past 30 days. ONEOK has a market cap of $9.1 billion and is part of the utilities industry. Shares are up 77.5% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates ONEOK as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 37.2% when compared to the same quarter one year prior, rising from $60.80 million to $83.45 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ONEOK INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • ONEOK INC has improved earnings per share by 37.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ONEOK INC reported lower earnings of $1.19 versus $1.53 in the prior year. This year, the market expects an improvement in earnings ($1.75 versus $1.19).
  • The gross profit margin for ONEOK INC is rather low; currently it is at 22.64%. Regardless of OKE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, OKE's net profit margin of 4.70% compares favorably to the industry average.
  • The debt-to-equity ratio is very high at 32.16 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.37, which clearly demonstrates the inability to cover short-term cash needs.

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