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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 "Sell."

Great Ajax

Dividend Yield: 7.50%

Great Ajax

(NYSE:

AJX

) shares currently have a dividend yield of 7.50%.

Great Ajax Corp. focuses primarily on acquiring, investing in, and managing a portfolio of re-performing and non-performing mortgage loans secured by single-family residences and single-family properties. The company has a P/E ratio of 7.04.

The average volume for Great Ajax has been 56,300 shares per day over the past 30 days. Great Ajax has a market cap of $213.3 million and is part of the real estate industry. Shares are up 8.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Great Ajax

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TheStreet Recommends

as a

sell

. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

Highlights from the ratings report include:

  • Net operating cash flow has significantly decreased to -$4.13 million or 634.67% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • After a year of stock price fluctuations, the net result is that AJX'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.
  • GREAT AJAX CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, GREAT AJAX CORP increased its bottom line by earning $1.62 versus $0.22 in the prior year. This year, the market expects an improvement in earnings ($2.18 versus $1.62).
  • 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 110.2% when compared to the same quarter one year prior, rising from $3.64 million to $7.65 million.
  • Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, GREAT AJAX CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

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Gladstone Commercial

Dividend Yield: 8.90%

Gladstone Commercial

(NASDAQ:

GOOD

) shares currently have a dividend yield of 8.90%.

Gladstone Commercial Corporation operates as a real estate investment trust (REIT) in the United States. It engages in investing in and owning net leased industrial and commercial real properties, and making long-term industrial and commercial mortgage loans.

The average volume for Gladstone Commercial has been 116,800 shares per day over the past 30 days. Gladstone Commercial has a market cap of $398.9 million and is part of the real estate industry. Shares are up 15.3% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Gladstone Commercial

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, GLADSTONE COMMERCIAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $8.78 million or 1.72% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • After a year of stock price fluctuations, the net result is that GOOD'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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • GLADSTONE COMMERCIAL CORP has improved earnings per share by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, GLADSTONE COMMERCIAL CORP continued to lose money by earning -$0.07 versus -$0.61 in the prior year. For the next year, the market is expecting a contraction of 7.1% in earnings (-$0.08 versus -$0.07).
  • 43.03% is the gross profit margin for GLADSTONE COMMERCIAL CORP which we consider to be strong. Regardless of GOOD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GOOD's net profit margin of 3.96% is significantly lower than the industry average.

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Wheeler Real Estate Investment

Dividend Yield: 13.60%

Wheeler Real Estate Investment

(NASDAQ:

WHLR

) shares currently have a dividend yield of 13.60%.

Wheeler Real Estate Investment Trust, Inc. engages in acquiring, financing, developing, leasing, owning, and managing real estate properties in the mid-Atlantic, southeast, and southwest United States.

The average volume for Wheeler Real Estate Investment has been 119,200 shares per day over the past 30 days. Wheeler Real Estate Investment has a market cap of $102.3 million and is part of the real estate industry. Shares are down 21.2% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Wheeler Real Estate Investment

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, WHEELER REAL ESTATE INVT TR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for WHEELER REAL ESTATE INVT TR is currently extremely low, coming in at 13.21%. Regardless of WHLR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, WHLR's net profit margin of -35.32% significantly underperformed when compared to the industry average.
  • WHLR'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 27.36%, 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.
  • WHEELER REAL ESTATE INVT TR 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, WHEELER REAL ESTATE INVT TR reported poor results of -$5.38 versus -$1.83 in the prior year. This year, the market expects an improvement in earnings (-$0.19 versus -$5.38).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 14.2% when compared to the same quarter one year prior, going from -$3.76 million to -$3.23 million.

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