Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer

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."

Arc Logistics Partners

Dividend Yield: 8.70%

Arc Logistics Partners

(NYSE:

ARCX

) shares currently have a dividend yield of 8.70%.

ARC Logistics Partners LP engages in the terminalling, storage, throughput, and transloading of crude oil and petroleum products. The company has a P/E ratio of 378.80.

The average volume for Arc Logistics Partners has been 9,300 shares per day over the past 30 days. Arc Logistics Partners has a market cap of $130.1 million and is part of the energy industry. Shares are up 10% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Arc Logistics Partners

as a

sell

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

Highlights from the ratings report include:

  • The share price of ARC LOGISTICS PARTNERS LP has not done very well: it is down 11.90% 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. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
  • 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 1475.1% when compared to the same quarter one year ago, falling from $0.36 million to -$4.96 million.
  • ARC LOGISTICS PARTNERS LP 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ARC LOGISTICS PARTNERS LP reported lower earnings of $0.06 versus $0.13 in the prior year. This year, the market expects an improvement in earnings ($0.86 versus $0.06).
  • The gross profit margin for ARC LOGISTICS PARTNERS LP is rather high; currently it is at 51.11%. Regardless of ARCX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ARCX's net profit margin of -37.39% significantly underperformed when compared to the industry average.
  • Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ARC LOGISTICS PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.

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Seadrill Partners

Dividend Yield: 17.20%

Seadrill Partners

(NYSE:

SDLP

) shares currently have a dividend yield of 17.20%.

Seadrill Partners LLC owns, operates, and acquires offshore drilling units. The company operates semi-submersible drilling rigs, tender rings, and drill ships. It primarily serves various oil and gas companies. The company was founded in 2012 and is headquartered in London, the United Kingdom. The company has a P/E ratio of 6.13.

The average volume for Seadrill Partners has been 507,500 shares per day over the past 30 days. Seadrill Partners has a market cap of $992.9 million and is part of the energy industry. Shares are down 23.6% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

TheStreet Recommends

Seadrill Partners

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, 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 debt-to-equity ratio is very high at 3.93 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, SDLP maintains a poor quick ratio of 0.88, which illustrates the inability to avoid short-term cash problems.
  • Net operating cash flow has decreased to $169.50 million or 45.39% 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.
  • 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 Energy Equipment & Services industry and the overall market on the basis of return on equity, SEADRILL PARTNERS LLC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Looking at the price performance of SDLP's shares over the past 12 months, there is not much good news to report: the stock is down 54.24%, 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.
  • SEADRILL PARTNERS LLC'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, SEADRILL PARTNERS LLC reported lower earnings of $1.76 versus $1.86 in the prior year. This year, the market expects an improvement in earnings ($2.69 versus $1.76).

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Companhia Siderurgica Nacional

Dividend Yield: 7.40%

Companhia Siderurgica Nacional

(NYSE:

SID

) shares currently have a dividend yield of 7.40%.

Companhia Siderurgica Nacional operates as an integrated steel producer primarily in Brazil. It operates through five segments: Steel, Mining, Cement, Logistics, and Energy. The company has a P/E ratio of 11.20.

The average volume for Companhia Siderurgica Nacional has been 3,052,400 shares per day over the past 30 days. Companhia Siderurgica Nacional has a market cap of $2.3 billion and is part of the metals & mining industry. Shares are down 16.4% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Companhia Siderurgica Nacional

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, 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 5.25 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • 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 Metals & Mining industry and the overall market on the basis of return on equity, COMPANHIA SIDERURGICA NACION underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for COMPANHIA SIDERURGICA NACION is currently lower than what is desirable, coming in at 31.37%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.72% trails that of the industry average.
  • SID'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 55.96%, 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.
  • SID, with its decline in revenue, underperformed when compared the industry average of 18.7%. Since the same quarter one year prior, revenues fell by 40.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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