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."

Harte-Hanks

Dividend Yield: 12.40%

Harte-Hanks

(NYSE:

HHS

) shares currently have a dividend yield of 12.40%.

Harte-Hanks, Inc. provides various marketing services in the United States and internationally. The company operates in two segments, Customer Interaction and Trillium Software.

The average volume for Harte-Hanks has been 306,200 shares per day over the past 30 days. Harte-Hanks has a market cap of $168.4 million and is part of the media industry. Shares are down 17.3% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Harte-Hanks

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, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:

  • HARTE HANKS 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. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, HARTE HANKS INC reported lower earnings of $0.38 versus $0.39 in the prior year. For the next year, the market is expecting a contraction of 31.6% in earnings ($0.26 versus $0.38).
  • 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 Media industry. The net income has significantly decreased by 2762.2% when compared to the same quarter one year ago, falling from $6.42 million to -$170.92 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 Media industry and the overall market, HARTE HANKS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for HARTE HANKS INC is rather low; currently it is at 17.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -140.13% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $2.22 million or 63.88% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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Ellington Residential Mortgage REIT

Dividend Yield: 16.10%

Ellington Residential Mortgage REIT

(NYSE:

EARN

) shares currently have a dividend yield of 16.10%.

Ellington Residential Mortgage REIT, a real estate investment trust, specializes in acquiring, investing in, and managing residential mortgage-and real estate-related assets.

The average volume for Ellington Residential Mortgage REIT has been 50,600 shares per day over the past 30 days. Ellington Residential Mortgage REIT has a market cap of $101.9 million and is part of the real estate industry. Shares are down 15.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Ellington Residential Mortgage REIT

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 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 236.3% when compared to the same quarter one year ago, falling from $3.53 million to -$4.82 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, ELLINGTON RESIDENTIAL MTG's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$3.89 million or 428.37% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much 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 30.45%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 235.89% 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.
  • EARN, with its decline in revenue, slightly underperformed the industry average of 6.1%. Since the same quarter one year prior, revenues slightly dropped by 1.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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TransGlobe Energy

Dividend Yield: 7.50%

TransGlobe Energy

(NASDAQ:

TGA

) shares currently have a dividend yield of 7.50%.

TransGlobe Energy Corporation acquires, explores, develops, and produces oil and gas properties in the Arab Republic of Egypt.

The average volume for TransGlobe Energy has been 203,100 shares per day over the past 30 days. TransGlobe Energy has a market cap of $96.0 million and is part of the energy industry. Shares are down 37.8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

TransGlobe 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 and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • TRANSGLOBE ENERGY 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. During the past fiscal year, TRANSGLOBE ENERGY CORP swung to a loss, reporting -$0.02 versus $0.57 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 343.0% when compared to the same quarter one year ago, falling from $19.16 million to -$46.57 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, TRANSGLOBE ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 53.50%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 477.77% 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.
  • Along with the very weak revenue results, TGA underperformed when compared to the industry average of 36.8%. Since the same quarter one year prior, revenues plummeted by 63.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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