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."

Capstead Mortgage

Dividend Yield: 10.90%

Capstead Mortgage

(NYSE:

CMO

) shares currently have a dividend yield of 10.90%.

Capstead Mortgage Corporation operates as a real estate investment trust (REIT) in the United States. The company has a P/E ratio of 9.84.

The average volume for Capstead Mortgage has been 1,077,000 shares per day over the past 30 days. Capstead Mortgage has a market cap of $914.2 million and is part of the real estate industry. Shares are up 9.7% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Capstead Mortgage

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 underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry average. The net income has decreased by 15.3% when compared to the same quarter one year ago, dropping from $33.47 million to $28.36 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CAPSTEAD MORTGAGE CORP's return on equity is below that of both the industry average and the S&P 500.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, CMO has underperformed the S&P 500 Index, declining 19.12% from its price level of one year ago. 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.
  • CAPSTEAD MORTGAGE CORP's earnings per share declined by 16.1% 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, CAPSTEAD MORTGAGE CORP reported lower earnings of $0.98 versus $1.33 in the prior year. This year, the market expects an improvement in earnings ($1.02 versus $0.98).
  • The gross profit margin for CAPSTEAD MORTGAGE CORP is currently very high, coming in at 93.47%. Regardless of CMO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CMO's net profit margin of 48.74% significantly outperformed against the industry.

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Williams Partners

Dividend Yield: 18.80%

Williams Partners

(NYSE:

WPZ

) shares currently have a dividend yield of 18.80%.

Williams Partners L.P. operates as an energy infrastructure company. It operates through five business segments: Access Midstream; Northeast G&P; Atlantic-Gulf; West; and NGL & Petchem Services.

The average volume for Williams Partners has been 4,440,900 shares per day over the past 30 days. Williams Partners has a market cap of $10.9 billion and is part of the energy industry. Shares are down 28% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Williams Partners

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, 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 520.1% when compared to the same quarter one year ago, falling from $382.00 million to -$1,605.00 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 60.80%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 857.00% 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.
  • WILLIAMS 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, WILLIAMS PARTNERS LP swung to a loss, reporting -$3.14 versus $0.95 in the prior year. This year, the market expects an improvement in earnings ($0.12 versus -$3.14).
  • Despite the weak revenue results, WPZ has outperformed against the industry average of 32.6%. Since the same quarter one year prior, revenues slightly dropped by 4.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for WILLIAMS PARTNERS LP is rather high; currently it is at 59.16%. 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 -80.33% is in-line with the industry average.

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Aegon

Dividend Yield: 5.60%

Aegon

(NYSE:

AEG

) shares currently have a dividend yield of 5.60%.

Aegon N.V. provides life insurance, pensions, and asset management services. The company operates through the Americas, the Netherlands, the United Kingdom, and New Markets.

The average volume for Aegon has been 1,940,600 shares per day over the past 30 days. Aegon has a market cap of $12.8 billion and is part of the insurance industry. Shares are down 12% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Aegon

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, poor profit margins 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 Insurance industry. The net income has significantly decreased by 309.7% when compared to the same quarter one year ago, falling from $279.21 million to -$585.47 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, AEGON NV underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Net operating cash flow has significantly decreased to -$251.97 million or 125.21% 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 AEGON NV is currently lower than what is desirable, coming in at 29.06%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, AEG's net profit margin of -65.51% significantly underperformed when compared to the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 36.73%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 330.00% 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.

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