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."

Xenia Hotels & Resorts

Dividend Yield: 6.20%

Xenia Hotels & Resorts (NYSE: XHR) shares currently have a dividend yield of 6.20%.

Xenia Hotels & Resorts, Inc. operates as a self-advised and self-administered real estate investment trust (REIT) that invests in full service hotels in the United States. As of February 23, 2016, it owned 50 hotels comprising 12,548 rooms across 21 states and the District of Columbia. The company has a P/E ratio of 21.11.

The average volume for Xenia Hotels & Resorts has been 529,900 shares per day over the past 30 days. Xenia Hotels & Resorts has a market cap of $1.9 billion and is part of the real estate industry. Shares are up 15.8% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Xenia Hotels & Resorts as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and reasonable valuation levels. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • 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 Real Estate Investment Trusts (REITs) industry average. The net income increased by 40.0% when compared to the same quarter one year prior, rising from -$14.87 million to -$8.92 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 3.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, XENIA HOTELS & RESORTS INC's return on equity is below that of both the industry average and the S&P 500.
  • XENIA HOTELS & RESORTS INC has improved earnings per share by 38.5% in the most recent quarter compared to the same quarter a year ago. For the next year, the market is expecting a contraction of 12.7% in earnings ($0.69 versus $0.79).
  • The gross profit margin for XENIA HOTELS & RESORTS INC is currently extremely low, coming in at 4.74%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -3.79% is significantly below that of the industry average.

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Apollo Commercial Real Estate Finance

Dividend Yield: 11.10%

Apollo Commercial Real Estate Finance (NYSE: ARI) shares currently have a dividend yield of 11.10%.

Apollo Commercial Real Estate Finance, Inc. The company has a P/E ratio of 13.27.

The average volume for Apollo Commercial Real Estate Finance has been 691,600 shares per day over the past 30 days. Apollo Commercial Real Estate Finance has a market cap of $1.1 billion and is part of the real estate industry. Shares are down 4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Apollo Commercial Real Estate Finance as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • ARI's very impressive revenue growth greatly exceeded the industry average of 11.9%. Since the same quarter one year prior, revenues leaped by 53.6%. 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.
  • The gross profit margin for APOLLO COMMERCIAL RE FIN INC is currently very high, coming in at 78.19%. Regardless of ARI'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 30.26% trails the industry average.
  • 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 27.0% when compared to the same quarter one year ago, falling from $25.51 million to $18.62 million.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, APOLLO COMMERCIAL RE FIN INC's return on equity is below that of both the industry average and the S&P 500.

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HCP

Dividend Yield: 6.00%

HCP (NYSE: HCP) shares currently have a dividend yield of 6.00%.

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 3,857,200 shares per day over the past 30 days. HCP has a market cap of $17.9 billion and is part of the real estate industry. Shares are up 0.8% year-to-date as of the close of trading on Thursday.

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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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