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."

Capitala Finance

Dividend Yield: 17.90%

Capitala Finance

(NASDAQ:

CPTA

) shares currently have a dividend yield of 17.90%.

Capitala Finance Corp. is a Business Development Company specializing in investments in traditional mezzanine, senior subordinated and unitranche debt, second-lien loans, equity securities issued by lower and traditional middle-market companies, and small and middle-market companies. The company has a P/E ratio of 58.22.

The average volume for Capitala Finance has been 112,200 shares per day over the past 30 days. Capitala Finance has a market cap of $165.2 million and is part of the financial services industry. Shares are down 14.8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Capitala Finance

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and disappointing return on equity.

Highlights from the ratings report include:

  • CPTA'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 43.31%, 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. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • 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 Capital Markets industry and the overall market, CAPITALA FINANCE CORP's return on equity is below that of both the industry average and the S&P 500.
  • CAPITALA FINANCE CORP reported significant earnings per share improvement in the most recent quarter compared to 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, CAPITALA FINANCE CORP swung to a loss, reporting -$0.27 versus $1.13 in the prior year. This year, the market expects an improvement in earnings ($1.65 versus -$0.27).
  • The gross profit margin for CAPITALA FINANCE CORP is rather high; currently it is at 68.81%. Regardless of CPTA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CPTA's net profit margin of 43.47% significantly outperformed against the industry.

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Navios Maritime Midstream Partners

Dividend Yield: 18.00%

Navios Maritime Midstream Partners

(NYSE:

NAP

) shares currently have a dividend yield of 18.00%.

Navios Maritime Midstream Partners L.P. owns and operates very large crude oil (VLCC) tankers under long-term contracts with international oil companies, refiners, and large vessel operators. As of December 31, 2014, it owned four VLCC tanker vessels. The company has a P/E ratio of 72.23.

The average volume for Navios Maritime Midstream Partners has been 155,200 shares per day over the past 30 days. Navios Maritime Midstream Partners has a market cap of $190.4 million and is part of the transportation industry. Shares are down 18.6% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Navios Maritime Midstream Partners

as a

sell

. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • NAP'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 31.25%, 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.
  • NAP's debt-to-equity ratio of 0.71 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 11.22 is very high and demonstrates very strong liquidity.
  • The gross profit margin for NAVIOS MARITIME MIDSTR PN LP is currently very high, coming in at 95.64%. Regardless of NAP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NAP's net profit margin of 35.35% significantly outperformed against the industry.
  • Net operating cash flow has increased to $15.74 million or 28.70% when compared to the same quarter last year. In addition, NAVIOS MARITIME MIDSTR PN LP has also vastly surpassed the industry average cash flow growth rate of -39.19%.
  • Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, NAVIOS MARITIME MIDSTR PN LP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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Natural Resources Partners

Dividend Yield: 20.00%

Natural Resources Partners

(NYSE:

NRP

) shares currently have a dividend yield of 20.00%.

Natural Resource Partners L.P., through its subsidiaries, owns, manages, and leases mineral properties in the United States.

The average volume for Natural Resources Partners has been 49,100 shares per day over the past 30 days. Natural Resources Partners has a market cap of $110.3 million and is part of the metals & mining industry. Shares are down 32.8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Natural Resources Partners

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, generally high debt management risk, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • NATURAL RESOURCE 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. 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, NATURAL RESOURCE PARTNERS LP reported lower earnings of $9.60 versus $15.40 in the prior year. For the next year, the market is expecting a contraction of 21.9% in earnings ($7.50 versus $9.60).
  • 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 1755.3% when compared to the same quarter one year ago, falling from $36.17 million to -$598.76 million.
  • The debt-to-equity ratio is very high at 13.75 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, NRP maintains a poor quick ratio of 0.82, which illustrates the inability to avoid short-term cash problems.
  • 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, NATURAL RESOURCE PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $55.24 million or 3.86% when compared to the same quarter last year. Despite a decrease in cash flow NATURAL RESOURCE PARTNERS LP is still fairing well by exceeding its industry average cash flow growth rate of -39.19%.

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