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."

CM Finance

Dividend Yield: 17.60%

CM Finance

(NASDAQ:

CMFN

) shares currently have a dividend yield of 17.60%.

CM Finance Inc. is a business development company. The company has a P/E ratio of 6.26.

The average volume for CM Finance has been 48,200 shares per day over the past 30 days. CM Finance has a market cap of $109.0 million and is part of the financial services industry. Shares are down 22% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

CM Finance

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity 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 Capital Markets industry. The net income has significantly decreased by 290.5% when compared to the same quarter one year ago, falling from $8.08 million to -$15.40 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 Capital Markets industry and the overall market, CM FINANCE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 41.55%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 291.52% 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.
  • CM FINANCE 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CM FINANCE INC increased its bottom line by earning $1.13 versus $0.81 in the prior year. This year, the market expects an improvement in earnings ($1.56 versus $1.13).
  • The gross profit margin for CM FINANCE INC is currently very high, coming in at 77.18%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -154.60% is in-line with the industry average.

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Hoegh LNG Partners

Dividend Yield: 10.20%

Hoegh LNG Partners

(NYSE:

HMLP

) shares currently have a dividend yield of 10.20%.

Hoegh LNG Partners LP focuses on owning, operating, and acquiring floating storage and regasification units, liquefied natural gas (LNG) carriers, and other LNG infrastructure assets under long-term charters. Hoegh LNG GP LLC is the general partner of the company. The company has a P/E ratio of 11.01.

The average volume for Hoegh LNG Partners has been 46,900 shares per day over the past 30 days. Hoegh LNG Partners has a market cap of $424.2 million and is part of the transportation industry. Shares are down 10.3% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Hoegh LNG Partners

as a

sell

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

Highlights from the ratings report include:

  • Currently the debt-to-equity ratio of 1.65 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.45, which clearly demonstrates the inability to cover short-term cash needs.
  • HMLP'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 28.05%, 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.
  • HOEGH LNG PARTNERS LP 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, HOEGH LNG PARTNERS LP increased its bottom line by earning $1.54 versus $0.04 in the prior year. This year, the market expects an improvement in earnings ($1.76 versus $1.54).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 217.3% when compared to the same quarter one year prior, rising from $5.19 million to $16.46 million.
  • The gross profit margin for HOEGH LNG PARTNERS LP is currently very high, coming in at 82.34%. It has increased significantly from the same period last year. Along with this, the net profit margin of 70.24% significantly outperformed against the industry average.

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Memorial Production Partners

Dividend Yield: 18.80%

Memorial Production Partners

(NASDAQ:

MEMP

) shares currently have a dividend yield of 18.80%.

Memorial Production Partners LP, through its subsidiary, Memorial Production Operating LLC, engages in the acquisition, development, exploitation, and production of oil and natural gas properties.

The average volume for Memorial Production Partners has been 956,400 shares per day over the past 30 days. Memorial Production Partners has a market cap of $176.9 million and is part of the energy industry. Shares are down 23.9% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Memorial Production Partners

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 289.9% when compared to the same quarter one year ago, falling from $101.16 million to -$192.09 million.
  • The debt-to-equity ratio is very high at 3.17 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.38, which clearly demonstrates the inability to cover short-term cash needs.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, MEMORIAL PRODUCTION PRTRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $73.85 million or 15.81% when compared to the same quarter last year. Despite a decrease in cash flow MEMORIAL PRODUCTION PRTRS LP is still fairing well by exceeding its industry average cash flow growth rate of -39.33%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 88.02%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 266.18% 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.

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