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."

Independence Realty

Dividend Yield: 9.80%

Independence Realty

(AMEX:

IRT

) shares currently have a dividend yield of 9.80%.

Independence Realty Trust, Inc is an equity real estate investment trust launched by RAIT Financial Trust. It is managed by Independence Realty Advisors, LLC. The fund invests in the real estate markets of the United States. It makes investments in apartment properties to create its portfolio.

The average volume for Independence Realty has been 189,400 shares per day over the past 30 days. Independence Realty has a market cap of $233.9 million and is part of the real estate industry. Shares are down 21.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Independence Realty

as a

sell

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

Highlights from the ratings report include:

  • IRT has underperformed the S&P 500 Index, declining 21.46% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, INDEPENDENCE REALTY TRUST's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for INDEPENDENCE REALTY TRUST is rather low; currently it is at 22.89%. Regardless of IRT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, IRT's net profit margin of 1.47% is significantly lower than the industry average.
  • INDEPENDENCE REALTY TRUST reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, INDEPENDENCE REALTY TRUST increased its bottom line by earning $0.19 versus $0.06 in the prior year. For the next year, the market is expecting a contraction of 189.5% in earnings (-$0.17 versus $0.19).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 363.3% when compared to the same quarter one year prior, rising from -$0.13 million to $0.34 million.

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JAVELIN Mortgage Investment

Dividend Yield: 17.00%

JAVELIN Mortgage Investment

(NYSE:

JMI

) shares currently have a dividend yield of 17.00%.

JAVELIN Mortgage Investment Corp., a real estate investment trust (REIT), invests primarily in fixed rate agency, and fixed rate and hybrid adjustable rate non-agency residential mortgage-backed securities in the United States. The company qualifies as a REIT for federal income tax purposes.

The average volume for JAVELIN Mortgage Investment has been 57,900 shares per day over the past 30 days. JAVELIN Mortgage Investment has a market cap of $75.8 million and is part of the real estate industry. Shares are down 38.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

JAVELIN Mortgage Investment

as a

sell

. The area that we feel has been the company's primary weakness has been its meager revenue growth.

Highlights from the ratings report include:

  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, JAVELIN MORTGAGE INVESTMENT's return on equity significantly trails that of both the industry average and the S&P 500.
  • The revenue fell significantly faster than the industry average of 9.8%. Since the same quarter one year prior, revenues fell by 35.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Compared to where it was trading one year ago, JMI is down 44.85% to its most recent closing price of 6.79. Looking ahead, our view is that this stock still does not have good upside potential and may even suffer further declines.
  • The gross profit margin for JAVELIN MORTGAGE INVESTMENT is currently very high, coming in at 80.25%. Regardless of JMI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, JMI's net profit margin of 194.48% significantly outperformed against the industry.
  • Net operating cash flow has significantly increased by 69.81% to $4.17 million when compared to the same quarter last year. In addition, JAVELIN MORTGAGE INVESTMENT has also vastly surpassed the industry average cash flow growth rate of 16.13%.

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Avianca Holdings

Dividend Yield: 10.50%

Avianca Holdings

(NYSE:

AVH

) shares currently have a dividend yield of 10.50%.

Avianca Holdings S.A., through its subsidiaries, provides air transportation services in North America, Central America, the Caribbean, Colombia, South America, and internationally.

The average volume for Avianca Holdings has been 296,300 shares per day over the past 30 days. Avianca Holdings has a market cap of $636.8 million and is part of the transportation industry. Shares are down 55.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Avianca Holdings

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk, poor profit margins, 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 compared to the Airlines industry average, but is greater than that of the S&P 500. The net income has decreased by 7.6% when compared to the same quarter one year ago, dropping from -$21.37 million to -$23.00 million.
  • The debt-to-equity ratio is very high at 2.57 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, AVH has a quick ratio of 0.63, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • The gross profit margin for AVIANCA HOLDINGS SA is rather low; currently it is at 23.84%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.16% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $95.88 million or 51.79% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Looking at the price performance of AVH's shares over the past 12 months, there is not much good news to report: the stock is down 60.44%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.

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