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3 Sell-Rated Dividend Stocks: LPHI, MITT, OIBR

Oi

Dividend Yield: 11.60%

Oi (NYSE:OIBR) shares currently have a dividend yield of 11.60%.

Oi S.A., through its subsidiaries, provides integrated telecommunication service for residential customers, companies, and governmental agencies in Brazil.

The average volume for Oi has been 3,334,000 shares per day over the past 30 days. Oi has a market cap of $4.0 billion and is part of the telecommunications industry. Shares are down 44.6% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Oi as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 2.95 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, OIBR maintains a poor quick ratio of 0.86, which illustrates the inability to avoid short-term cash problems.
  • OIBR's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 60.37%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • OI SA 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, OI SA reported lower earnings of $0.73 versus $0.92 in the prior year. For the next year, the market is expecting a contraction of 74.1% in earnings ($0.19 versus $0.73).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 614.9% when compared to the same quarter one year prior, rising from $71.96 million to $514.40 million.

New From TheStreet: Jim Cramer's Protégé, Dave Peltier, only buys dividend stocks that have the potential for a 3% to 4% yield and 10% growth. Get his best picks for less than $50/year.

Other helpful dividend tools from TheStreet:

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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