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."

Pier 1 Imports

Dividend Yield: 5.70%

Pier 1 Imports (NYSE: PIR) shares currently have a dividend yield of 5.70%.

Pier 1 Imports, Inc. engages in the retail sale of decorative accessories, furniture, candles, housewares, gifts, and seasonal products. The company has a P/E ratio of 15.47.

The average volume for Pier 1 Imports has been 2,564,900 shares per day over the past 30 days. Pier 1 Imports has a market cap of $412.3 million and is part of the specialty retail industry. Shares are down 3.7% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Pier 1 Imports as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. 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 disappointing return on equity.

Highlights from the ratings report include:
  • Net operating cash flow has increased to $33.52 million or 18.29% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.00%.
  • The debt-to-equity ratio is somewhat low, currently at 0.75, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that PIR's debt-to-equity ratio is low, the quick ratio, which is currently 0.53, displays a potential problem in covering short-term cash needs.
  • 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 Specialty Retail industry. The net income has significantly decreased by 187.6% when compared to the same quarter one year ago, falling from $6.87 million to -$6.02 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. In comparison to the other companies in the Specialty Retail industry and the overall market, PIER 1 IMPORTS INC/DE's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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Macquarie Infrastructure

Dividend Yield: 6.20%

Macquarie Infrastructure (NYSE: MIC) shares currently have a dividend yield of 6.20%.

Macquarie Infrastructure Company LLC, through its subsidiaries, owns, operates, and invests in infrastructure businesses that provide services to businesses, government agencies, and individuals primarily in the United States. The company has a P/E ratio of 699.46.

The average volume for Macquarie Infrastructure has been 499,800 shares per day over the past 30 days. Macquarie Infrastructure has a market cap of $6.2 billion and is part of the transportation industry. Shares are up 5.5% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Macquarie Infrastructure as a hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and generally higher debt management risk.

Highlights from the ratings report include:
  • Net operating cash flow has increased to $148.57 million or 26.96% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 8.04%.
  • The gross profit margin for MACQUARIE INFRASTRUCTURE CP is rather high; currently it is at 62.28%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, MIC's net profit margin of 5.63% significantly trails the industry average.
  • MACQUARIE INFRASTRUCTURE CP 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, MACQUARIE INFRASTRUCTURE CP swung to a loss, reporting -$1.48 versus $14.70 in the prior year. This year, the market expects an improvement in earnings ($1.59 versus -$1.48).
  • 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 Transportation Infrastructure industry and the overall market, MACQUARIE INFRASTRUCTURE CP's return on equity significantly trails that of both the industry average and the S&P 500.
  • MIC has underperformed the S&P 500 Index, declining 10.25% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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Lazard

Dividend Yield: 4.60%

Lazard (NYSE: LAZ) shares currently have a dividend yield of 4.60%.

Lazard Ltd, together with its subsidiaries, operates as a financial advisory and asset management firm worldwide. The company has a P/E ratio of 4.38.

The average volume for Lazard has been 1,057,100 shares per day over the past 30 days. Lazard has a market cap of $4.3 billion and is part of the financial services industry. Shares are down 24.7% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Lazard as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, notable return on equity and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins, weak operating cash flow 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 exceeded that of the S&P 500 and greatly outperformed compared to the Capital Markets industry average. The net income increased by 19.4% when compared to the same quarter one year prior, going from $55.95 million to $66.82 million.
  • 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. Compared to other companies in the Capital Markets industry and the overall market, LAZARD LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Despite the weak revenue results, LAZ has outperformed against the industry average of 24.3%. Since the same quarter one year prior, revenues fell by 14.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for LAZARD LTD is rather low; currently it is at 23.18%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 13.13% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$99.89 million or 385.66% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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