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."

Fifth Street Senior Floating Rate

Dividend Yield: 11.30%

Fifth Street Senior Floating Rate

(NASDAQ:

FSFR

) shares currently have a dividend yield of 11.30%.

Fifth Street Senior Floating Rate Corp. is a business development company specializing in providing financing solutions in the form of floating rate senior secured loans to mid-sized companies. The company has a P/E ratio of 7.99.

The average volume for Fifth Street Senior Floating Rate has been 66,200 shares per day over the past 30 days. Fifth Street Senior Floating Rate has a market cap of $235.4 million and is part of the financial services industry. Shares are down 6.2% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Fifth Street Senior Floating Rate

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 Capital Markets industry. The net income has significantly decreased by 109.9% when compared to the same quarter one year ago, falling from $6.69 million to -$0.66 million.
  • 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 Capital Markets industry and the overall market, FIFTH STREET SR FLTG RATE CP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of FIFTH STREET SR FLTG RATE CP has not done very well: it is down 20.96% 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.
  • FIFTH STREET SR FLTG RATE CP 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, FIFTH STREET SR FLTG RATE CP reported lower earnings of $0.55 versus $0.97 in the prior year. This year, the market expects an improvement in earnings ($0.90 versus $0.55).
  • The gross profit margin for FIFTH STREET SR FLTG RATE CP is rather high; currently it is at 61.56%. Regardless of FSFR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FSFR's net profit margin of -5.00% significantly underperformed when compared to the industry average.

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Institutional Financial Markets

Dividend Yield: 9.30%

Institutional Financial Markets

(AMEX:

IFMI

) shares currently have a dividend yield of 9.30%.

Institutional Financial Markets, Inc. is a publicly owned investment manager. The firm primarily provides its services to individuals and institutions. It manages separate client-focused fixed income portfolios. Institutional Financial Markets, Inc.

The average volume for Institutional Financial Markets has been 13,700 shares per day over the past 30 days. Institutional Financial Markets has a market cap of $10.5 million and is part of the financial services industry. Shares are down 26.7% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Institutional Financial Markets

as a

sell

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

Highlights from the ratings report include:

  • 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 Capital Markets industry and the overall market, INSTITUTIONAL FINANCIAL MKTS's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for INSTITUTIONAL FINANCIAL MKTS is currently extremely low, coming in at 9.80%. Regardless of IFMI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, IFMI's net profit margin of 1.44% is significantly lower than the industry average.
  • IFMI'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 41.50%, 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. 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.
  • INSTITUTIONAL FINANCIAL MKTS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, INSTITUTIONAL FINANCIAL MKTS reported poor results of -$0.28 versus -$0.17 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 135.7% when compared to the same quarter one year prior, rising from -$0.56 million to $0.20 million.

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City Office REIT

Dividend Yield: 8.00%

City Office REIT

(NYSE:

CIO

) shares currently have a dividend yield of 8.00%.

City Office REIT, Inc is an equity real estate investment trust. The fund invests in the real estate markets of the United States. It acquires, own and operate high-quality office properties. City Office REIT, Inc was formed in November 26, 2013 and is domiciled in the United States.

The average volume for City Office REIT has been 216,500 shares per day over the past 30 days. City Office REIT has a market cap of $250.3 million and is part of the real estate industry. Shares are down 4.3% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

City Office REIT

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, 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 858.1% when compared to the same quarter one year ago, falling from -$0.74 million to -$7.12 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, CITY OFFICE REIT INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CITY OFFICE REIT INC is rather low; currently it is at 21.24%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -43.74% is significantly below that of the industry average.
  • The share price of CITY OFFICE REIT INC has not done very well: it is down 7.47% 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.
  • CITY OFFICE REIT 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, CITY OFFICE REIT INC continued to lose money by earning -$0.53 versus -$0.60 in the prior year. For the next year, the market is expecting a contraction of 30.2% in earnings (-$0.69 versus -$0.53).

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