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."

Fly Leasing

Dividend Yield: 7.60%

Fly Leasing

(NYSE:

FLY

) shares currently have a dividend yield of 7.60%.

FLY Leasing Limited, together with its subsidiaries, engages in purchasing and leasing commercial aircraft under multi-year contracts to various airlines worldwide.

The average volume for Fly Leasing has been 214,900 shares per day over the past 30 days. Fly Leasing has a market cap of $546.1 million and is part of the diversified services industry. Shares are up 1.1% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Fly Leasing

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 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 Trading Companies & Distributors industry. The net income has significantly decreased by 368.8% when compared to the same quarter one year ago, falling from $21.67 million to -$58.26 million.
  • The debt-to-equity ratio is very high at 4.24 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 Trading Companies & Distributors industry and the overall market, FLY LEASING LTD -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • FLY LEASING LTD -ADR 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, FLY LEASING LTD -ADR reported lower earnings of $1.32 versus $1.67 in the prior year. This year, the market expects an improvement in earnings ($1.94 versus $1.32).
  • After a year of stock price fluctuations, the net result is that FLY's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.

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Apollo Residential Mortgage

Dividend Yield: 14.90%

Apollo Residential Mortgage

(NYSE:

AMTG

) shares currently have a dividend yield of 14.90%.

Apollo Residential Mortgage, Inc. primarily invests in residential mortgage assets in the United States. The company has a P/E ratio of 19.28.

The average volume for Apollo Residential Mortgage has been 220,600 shares per day over the past 30 days. Apollo Residential Mortgage has a market cap of $414.7 million and is part of the real estate industry. Shares are down 20.2% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Apollo Residential 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 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 300.2% when compared to the same quarter one year ago, falling from $10.88 million to -$21.78 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, APOLLO RESIDENTIAL MTG INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of APOLLO RESIDENTIAL MTG INC has not done very well: it is down 21.13% 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.
  • APOLLO RESIDENTIAL MTG 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, APOLLO RESIDENTIAL MTG INC turned its bottom line around by earning $2.54 versus -$1.91 in the prior year. For the next year, the market is expecting a contraction of 16.7% in earnings ($2.12 versus $2.54).
  • The gross profit margin for APOLLO RESIDENTIAL MTG INC is currently very high, coming in at 84.44%. Regardless of AMTG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AMTG's net profit margin of -53.16% significantly underperformed when compared to the industry average.

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Anworth Mortgage Asset

Dividend Yield: 12.90%

Anworth Mortgage Asset

(NYSE:

ANH

) shares currently have a dividend yield of 12.90%.

Anworth Mortgage Asset Corporation operates as a real estate investment trust in the United States.

The average volume for Anworth Mortgage Asset has been 995,700 shares per day over the past 30 days. Anworth Mortgage Asset has a market cap of $476.3 million and is part of the real estate industry. Shares are down 11.1% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Anworth Mortgage Asset

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 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 211.9% when compared to the same quarter one year ago, falling from $19.49 million to -$21.81 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, ANWORTH MTG ASSET CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of ANWORTH MTG ASSET CORP has not done very well: it is down 9.20% 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.
  • ANWORTH MTG ASSET CORP 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, ANWORTH MTG ASSET CORP reported lower earnings of $0.18 versus $0.49 in the prior year. This year, the market expects an improvement in earnings ($0.30 versus $0.18).
  • The gross profit margin for ANWORTH MTG ASSET CORP is currently very high, coming in at 90.34%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -58.65% is in-line with the industry average.

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