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."

BlackRock Capital Investment

Dividend Yield: 11.20%

BlackRock Capital Investment (NASDAQ: BKCC) shares currently have a dividend yield of 11.20%.

BlackRock Capital Investment Corporation, formerly known as BlackRock Kelso Capital Corporation, is a Business Development Company specializing in investments in middle market companies. The fund invests in all industries. The company has a P/E ratio of 5.26.

The average volume for BlackRock Capital Investment has been 457,200 shares per day over the past 30 days. BlackRock Capital Investment has a market cap of $548.7 million and is part of the financial services industry. Shares are down 18.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates BlackRock Capital Investment as a hold. Among the primary strengths of the company is its expanding profit margins over time. 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:
  • The gross profit margin for BLACKROCK CAPITAL INVT CORP is currently very high, coming in at 74.60%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -127.94% is in-line with the industry average.
  • Despite the weak revenue results, BKCC has outperformed against the industry average of 24.4%. Since the same quarter one year prior, revenues slightly dropped by 3.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • BLACKROCK CAPITAL INVT CORP 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, BLACKROCK CAPITAL INVT CORP reported lower earnings of $0.54 versus $1.70 in the prior year. This year, the market expects an improvement in earnings ($1.01 versus $0.54).
  • 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 Capital Markets industry. The net income has significantly decreased by 268.5% when compared to the same quarter one year ago, falling from $22.66 million to -$38.18 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 Capital Markets industry and the overall market, BLACKROCK CAPITAL INVT CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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RELM Wireless

Dividend Yield: 7.10%

RELM Wireless (AMEX: RWC) shares currently have a dividend yield of 7.10%.

RELM Wireless Corporation designs, manufactures, and markets wireless communications products in the United States and internationally. The company offers two-way land mobile radios, repeaters, base stations, and related components and subsystems under the BK Radio and RELM brand names. The company has a P/E ratio of 63.62.

The average volume for RELM Wireless has been 8,700 shares per day over the past 30 days. RELM Wireless has a market cap of $69.9 million and is part of the telecommunications industry. Shares are up 32.2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates RELM Wireless as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 0.3%. Since the same quarter one year prior, revenues rose by 40.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • RWC has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.38, which illustrates the ability to avoid short-term cash problems.
  • 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 Communications Equipment industry and the overall market, RELM WIRELESS CORP's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for RELM WIRELESS CORP is currently lower than what is desirable, coming in at 33.50%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 4.25% significantly trails the industry average.

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Fortress Investment Group

Dividend Yield: 8.50%

Fortress Investment Group (NYSE: FIG) shares currently have a dividend yield of 8.50%.

Fortress Investment Group LLC is a publicly owned investment manager. The company has a P/E ratio of 26.44.

The average volume for Fortress Investment Group has been 748,800 shares per day over the past 30 days. Fortress Investment Group has a market cap of $1.6 billion and is part of the financial services industry. Shares are down 15.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Fortress Investment Group as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth 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, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 24.4%. Since the same quarter one year prior, revenues slightly increased by 2.2%. 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.
  • Net operating cash flow has increased to -$135.94 million or 11.46% when compared to the same quarter last year. In addition, FORTRESS INVESTMENT GRP LLC has also vastly surpassed the industry average cash flow growth rate of -204.01%.
  • FORTRESS INVESTMENT GRP LLC 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, FORTRESS INVESTMENT GRP LLC reported lower earnings of $0.28 versus $0.38 in the prior year. This year, the market expects an improvement in earnings ($0.72 versus $0.28).
  • 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 Capital Markets industry. The net income has significantly decreased by 124.6% when compared to the same quarter one year ago, falling from $34.71 million to -$8.53 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. When compared to other companies in the Capital Markets industry and the overall market, FORTRESS INVESTMENT GRP LLC's return on equity is below that of both the industry average and the S&P 500.

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