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."

Cherry Hill Mortgage Investment

Dividend Yield: 11.40%

Cherry Hill Mortgage Investment

(NYSE:

CHMI

) shares currently have a dividend yield of 11.40%.

Cherry Hill Mortgage Investment Corporation, a residential real estate finance company, acquires, invests in, and manages residential mortgage assets in the United States.

The average volume for Cherry Hill Mortgage Investment has been 23,000 shares per day over the past 30 days. Cherry Hill Mortgage Investment has a market cap of $129.5 million and is part of the real estate industry. Shares are down 6.7% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Cherry Hill Mortgage Investment

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 430.4% when compared to the same quarter one year ago, falling from $0.73 million to -$2.41 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, CHERRY HILL MTG INVST's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $4.70 million or 64.01% 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 share price of CHERRY HILL MTG INVST has not done very well: it is down 11.38% 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.
  • CHERRY HILL MTG INVST 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, CHERRY HILL MTG INVST reported lower earnings of $0.31 versus $2.83 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus $0.31).

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JAVELIN Mortgage Investment

Dividend Yield: 14.60%

JAVELIN Mortgage Investment

(NYSE:

JMI

) shares currently have a dividend yield of 14.60%.

JAVELIN Mortgage Investment Corp., a real estate investment trust (REIT), invests primarily in fixed rate agency, and fixed rate and hybrid adjustable rate non-agency residential mortgage-backed securities in the United States. The company qualifies as a REIT for federal income tax purposes.

The average volume for JAVELIN Mortgage Investment has been 90,200 shares per day over the past 30 days. JAVELIN Mortgage Investment has a market cap of $88.9 million and is part of the real estate industry. Shares are down 28.5% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

JAVELIN Mortgage Investment

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow and generally disappointing historical performance in the stock itself.

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 232.0% when compared to the same quarter one year ago, falling from -$1.86 million to -$6.19 million.
  • Net operating cash flow has significantly decreased to $0.57 million or 82.41% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.60%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 225.00% compared to 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.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, JAVELIN MORTGAGE INVESTMENT's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for JAVELIN MORTGAGE INVESTMENT is currently very high, coming in at 88.33%. Regardless of JMI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, JMI's net profit margin of -41.57% significantly underperformed when compared to the industry average.

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Midcoast Energy Partners

Dividend Yield: 12.30%

Midcoast Energy Partners

(NYSE:

MEP

) shares currently have a dividend yield of 12.30%.

Midcoast Energy Partners, L.P. engages in gathering, processing, treating, transporting, and marketing natural gas and natural gas liquids (NGL) in the United States. It operates through two segments, Gathering, Processing, and Transportation; and Logistics and Marketing. The company has a P/E ratio of 11.93.

The average volume for Midcoast Energy Partners has been 82,700 shares per day over the past 30 days. Midcoast Energy Partners has a market cap of $256.2 million and is part of the energy industry. Shares are down 17.2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Midcoast Energy Partners

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins, 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 5100.0% when compared to the same quarter one year ago, falling from $0.40 million to -$20.00 million.
  • The gross profit margin for MIDCOAST ENERGY PARTNERS LP is currently extremely low, coming in at 1.14%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.28% trails that of the industry average.
  • Net operating cash flow has decreased to $168.20 million or 21.32% when compared to the same quarter last year. Despite a decrease in cash flow MIDCOAST ENERGY PARTNERS LP is still fairing well by exceeding its industry average cash flow growth rate of -53.29%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 44.69%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 4500.00% compared to the year-earlier 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.
  • MIDCOAST ENERGY 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. 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, MIDCOAST ENERGY PARTNERS LP increased its bottom line by earning $1.40 versus $0.21 in the prior year. For the next year, the market is expecting a contraction of 133.2% in earnings (-$0.47 versus $1.40).

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