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: 11.50%

Fifth Street Senior Floating Rate

(NASDAQ:

FSFR

) shares currently have a dividend yield of 11.50%.

Fifth Street Senior Floating Rate Corp. The company has a P/E ratio of 7.83.

The average volume for Fifth Street Senior Floating Rate has been 136,100 shares per day over the past 30 days. Fifth Street Senior Floating Rate has a market cap of $230.7 million and is part of the financial services industry. Shares are down 23% year-to-date as of the close of trading on Thursday.

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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 weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • Net operating cash flow has significantly decreased to -$15.47 million or 157.90% 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 share price of FIFTH STREET SR FLTG RATE CP has not done very well: it is down 24.85% 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. 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.
  • 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. This year, the market expects an improvement in earnings ($1.02 versus $0.97).
  • When compared to other companies in the Capital Markets industry and the overall market, FIFTH STREET SR FLTG RATE CP's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for FIFTH STREET SR FLTG RATE CP is currently very high, coming in at 76.62%. 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 15.61% trails the industry average.

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Vermilion Energy

Dividend Yield: 7.20%

Vermilion Energy

(NYSE:

VET

) shares currently have a dividend yield of 7.20%.

Vermilion Energy Inc. acquires, explores, develops, and produces oil and natural gas in North America, Europe and Australia.

The average volume for Vermilion Energy has been 76,900 shares per day over the past 30 days. Vermilion Energy has a market cap of $2.9 billion and is part of the energy industry. Shares are down 47% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Vermilion Energy

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

Highlights from the ratings report include:

  • VERMILION ENERGY 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. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, VERMILION ENERGY INC reported lower earnings of $2.53 versus $3.19 in the prior year.
  • 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 254.6% when compared to the same quarter one year ago, falling from $53.90 million to -$83.31 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 Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, VERMILION ENERGY INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Net operating cash flow has decreased to $122.23 million or 47.98% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 33.94%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 252.00% 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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Kronos Worldwide

Dividend Yield: 10.80%

Kronos Worldwide

(NYSE:

KRO

) shares currently have a dividend yield of 10.80%.

Kronos Worldwide, Inc. produces and markets titanium dioxide pigments (TiO2) worldwide. The company has a P/E ratio of 1.43.

The average volume for Kronos Worldwide has been 379,600 shares per day over the past 30 days. Kronos Worldwide has a market cap of $646.6 million and is part of the chemicals industry. Shares are down 60.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Kronos Worldwide

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 Chemicals industry. The net income has significantly decreased by 137.0% when compared to the same quarter one year ago, falling from $31.90 million to -$11.80 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 Chemicals industry and the overall market, KRONOS WORLDWIDE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for KRONOS WORLDWIDE INC is rather low; currently it is at 15.96%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -3.50% is significantly below that of 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 52.83%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 135.71% 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.
  • KRONOS WORLDWIDE 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, KRONOS WORLDWIDE INC turned its bottom line around by earning $0.86 versus -$0.87 in the prior year. For the next year, the market is expecting a contraction of 83.1% in earnings ($0.15 versus $0.86).

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