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."

Anworth Mortgage Asset

Dividend Yield: 13.20%

Anworth Mortgage Asset

(NYSE:

ANH

) shares currently have a dividend yield of 13.20%.

Anworth Mortgage Asset Corporation operates as a real estate investment trust in the United States.

The average volume for Anworth Mortgage Asset has been 1,027,600 shares per day over the past 30 days. Anworth Mortgage Asset has a market cap of $455.5 million and is part of the real estate industry. Shares are down 13.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Anworth Mortgage Asset

as a

sell

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

Highlights from the ratings report include:

  • ANWORTH MTG ASSET CORP 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, ANWORTH MTG ASSET CORP reported lower earnings of $0.18 versus $0.49 in the prior year. For the next year, the market is expecting a contraction of 144.4% in earnings (-$0.08 versus $0.18).
  • 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 211.9% when compared to the same quarter one year ago, falling from $19.49 million to -$21.81 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, ANWORTH MTG ASSET CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $15.98 million or 36.89% 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 ANWORTH MTG ASSET CORP has not done very well: it is down 14.24% 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.

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Navios Maritime Holdings

Dividend Yield: 19.80%

Navios Maritime Holdings

(NYSE:

NM

) shares currently have a dividend yield of 19.80%.

Navios Maritime Holdings Inc. operates as a seaborne shipping and logistics company. It focuses on the transportation and transshipment of dry bulk commodities, including iron ore, coal, and grains. It operates in two segments, Dry bulk Vessel Operations and Logistics Business.

The average volume for Navios Maritime Holdings has been 966,700 shares per day over the past 30 days. Navios Maritime Holdings has a market cap of $130.8 million and is part of the transportation industry. Shares are down 70.8% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

TheStreet Recommends

Navios Maritime Holdings

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins, 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 company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Marine industry average. The net income has significantly decreased by 32.9% when compared to the same quarter one year ago, falling from -$16.60 million to -$22.06 million.
  • The gross profit margin for NAVIOS MARITIME HOLDINGS INC is currently lower than what is desirable, coming in at 25.82%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -16.84% is significantly below that of the industry average.
  • Currently the debt-to-equity ratio of 1.53 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, NM's quick ratio is somewhat strong at 1.21, demonstrating the ability to handle short-term liquidity needs.
  • Looking at the price performance of NM's shares over the past 12 months, there is not much good news to report: the stock is down 68.48%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier 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.
  • NAVIOS MARITIME HOLDINGS INC's earnings per share declined by 25.0% 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, NAVIOS MARITIME HOLDINGS INC continued to lose money by earning -$0.65 versus -$1.08 in the prior year. For the next year, the market is expecting a contraction of 63.1% in earnings (-$1.06 versus -$0.65).

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Dynex Capital

Dividend Yield: 14.80%

Dynex Capital

(NYSE:

DX

) shares currently have a dividend yield of 14.80%.

Dynex Capital, Inc., a mortgage real estate investment trust, invests in mortgage securities on a leveraged basis in the United States.

The average volume for Dynex Capital has been 353,700 shares per day over the past 30 days. Dynex Capital has a market cap of $319.1 million and is part of the real estate industry. Shares are down 21.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Dynex Capital

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, 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 219.8% when compared to the same quarter one year ago, falling from $30.87 million to -$36.98 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, DYNEX CAPITAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of DYNEX CAPITAL INC has not done very well: it is down 23.47% 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.
  • DYNEX CAPITAL 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, DYNEX CAPITAL INC reported lower earnings of $0.34 versus $1.10 in the prior year. This year, the market expects an improvement in earnings ($0.91 versus $0.34).
  • The revenue fell significantly faster than the industry average of 6.1%. Since the same quarter one year prior, revenues fell by 27.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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