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."

Apollo Residential Mortgage

Dividend Yield: 15.60%

Apollo Residential Mortgage

(NYSE:

AMTG

) shares currently have a dividend yield of 15.60%.

Apollo Residential Mortgage, Inc. primarily invests in residential mortgage assets in the United States.

The average volume for Apollo Residential Mortgage has been 264,400 shares per day over the past 30 days. Apollo Residential Mortgage has a market cap of $390.4 million and is part of the real estate industry. Shares are up 2.9% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Apollo Residential Mortgage

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • 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 300.2% when compared to the same quarter one year ago, falling from $10.88 million to -$21.78 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, APOLLO RESIDENTIAL MTG INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $12.00 million or 10.99% 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.
  • The share price of APOLLO RESIDENTIAL MTG INC has not done very well: it is down 20.87% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
  • APOLLO RESIDENTIAL MTG INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, APOLLO RESIDENTIAL MTG INC turned its bottom line around by earning $2.54 versus -$1.91 in the prior year. For the next year, the market is expecting a contraction of 16.9% in earnings ($2.11 versus $2.54).

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Gladstone Commercial

Dividend Yield: 10.20%

Gladstone Commercial

(NASDAQ:

GOOD

) shares currently have a dividend yield of 10.20%.

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 company has a P/E ratio of 77.05.

The average volume for Gladstone Commercial has been 144,000 shares per day over the past 30 days. Gladstone Commercial has a market cap of $323.0 million and is part of the real estate industry. Shares are up 1.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

TheStreet Recommends

Gladstone Commercial

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, unimpressive growth in net income and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, GOOD has underperformed the S&P 500 Index, declining 16.16% 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.
  • 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 141.1% when compared to the same quarter one year ago, falling from $0.23 million to -$0.10 million.
  • GLADSTONE COMMERCIAL CORP's earnings per share declined by 20.0% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, GLADSTONE COMMERCIAL CORP reported poor results of -$0.61 versus -$0.22 in the prior year. This year, the market expects an improvement in earnings (-$0.16 versus -$0.61).
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. 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.
  • 40.43% 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 -0.44% significantly underperformed when compared to the industry average.

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Avianca Holdings

Dividend Yield: 13.10%

Avianca Holdings

(NYSE:

AVH

) shares currently have a dividend yield of 13.10%.

Avianca Holdings S.A., through its subsidiaries, provides air transportation services in North America, Central America, the Caribbean, Colombia, South America, and internationally.

The average volume for Avianca Holdings has been 289,900 shares per day over the past 30 days. Avianca Holdings has a market cap of $514.7 million and is part of the transportation industry. Shares are down 10.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Avianca Holdings

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, weak operating cash flow, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 2.00 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, AVH has a quick ratio of 0.63, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly decreased to -$166.84 million or 475.72% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for AVIANCA HOLDINGS SA is currently lower than what is desirable, coming in at 29.27%. Regardless of AVH's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, AVH's net profit margin of 8.44% is significantly lower than the industry average.
  • AVH'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 63.17%, 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. 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.
  • 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 Airlines industry and the overall market, AVIANCA HOLDINGS SA'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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