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."

DDR

Dividend Yield: 4.10%

DDR (NYSE: DDR) shares currently have a dividend yield of 4.10%.

DDR Corp. is an equity real estate investment trust. It invests in the real estate markets of the United States and Puerto Rico. The firm is in the business of acquiring, owning, developing, redeveloping, expanding, leasing and managing shopping centers. The company has a P/E ratio of 34.74.

The average volume for DDR has been 2,490,300 shares per day over the past 30 days. DDR has a market cap of $6.7 billion and is part of the real estate industry. Shares are up 9.3% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates DDR as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • 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 118.7% when compared to the same quarter one year prior, rising from -$243.79 million to $45.57 million.
  • 38.68% is the gross profit margin for DDR CORP which we consider to be strong. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, DDR's net profit margin of 16.39% significantly trails the industry average.
  • DDR CORP 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, DDR CORP reported poor results of -$0.27 versus -$0.01 in the prior year. This year, the market expects an improvement in earnings ($0.22 versus -$0.27).
  • 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, DDR CORP's return on equity is below that of both the industry average and the S&P 500.

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Abercrombie & Fitch

Dividend Yield: 4.40%

Abercrombie & Fitch (NYSE: ANF) shares currently have a dividend yield of 4.40%.

Abercrombie & Fitch Co., through its subsidiaries, operates as a specialty retailer of casual apparel. The company has a P/E ratio of 21.61.

The average volume for Abercrombie & Fitch has been 3,094,700 shares per day over the past 30 days. Abercrombie & Fitch has a market cap of $1.2 billion and is part of the retail industry. Shares are down 32.8% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Abercrombie & Fitch as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 37.4% when compared to the same quarter one year prior, rising from -$63.25 million to -$39.59 million.
  • ANF's debt-to-equity ratio is very low at 0.27 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.16, which illustrates the ability to avoid short-term cash problems.
  • ABERCROMBIE & FITCH has improved earnings per share by 35.2% 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, ABERCROMBIE & FITCH reported lower earnings of $0.53 versus $0.73 in the prior year. This year, the market expects an improvement in earnings ($0.85 versus $0.53).
  • 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. In comparison to the other companies in the Specialty Retail industry and the overall market, ABERCROMBIE & FITCH's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • ANF has underperformed the S&P 500 Index, declining 17.21% 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: 6.50%

HCP (NYSE: HCP) shares currently have a dividend yield of 6.50%.

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 3,859,600 shares per day over the past 30 days. HCP has a market cap of $16.5 billion and is part of the real estate industry. Shares are down 7.6% year-to-date as of the close of trading on Friday.

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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 find that the company's return on equity has been disappointing.

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).
  • After a year of stock price fluctuations, the net result is that HCP's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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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