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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."

KNOT Offshore Partners

Dividend Yield: 14.80%

KNOT Offshore Partners

(NYSE:

KNOP

) shares currently have a dividend yield of 14.80%.

KNOT Offshore Partners LP owns and operates shuttle tankers under long-term charters in the North Sea and Brazil. The company provides crude oil loading, transportation, and storage services under time charters and bareboat charters. The company has a P/E ratio of 13.29.

The average volume for KNOT Offshore Partners has been 135,700 shares per day over the past 30 days. KNOT Offshore Partners has a market cap of $194.5 million and is part of the transportation industry. Shares are up 1.5% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

KNOT Offshore Partners

TheStreet Recommends

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The debt-to-equity ratio of 1.17 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • 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. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, KNOT OFFSHORE PRTNRS LP's return on equity is below 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 36.43%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 43.85% 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.
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 29.9% when compared to the same quarter one year ago, falling from $12.56 million to $8.80 million.
  • KNOT OFFSHORE PRTNRS LP's earnings per share declined by 43.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, KNOT OFFSHORE PRTNRS LP increased its bottom line by earning $1.34 versus $0.87 in the prior year. This year, the market expects an improvement in earnings ($1.41 versus $1.34).

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Memorial Production Partners

Dividend Yield: 14.70%

Memorial Production Partners

(NASDAQ:

MEMP

) shares currently have a dividend yield of 14.70%.

Memorial Production Partners LP, through its subsidiary, engages in the acquisition, development, exploitation, and production of oil and natural gas properties.

The average volume for Memorial Production Partners has been 1,293,600 shares per day over the past 30 days. Memorial Production Partners has a market cap of $226.4 million and is part of the energy industry. Shares are up 6.1% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Memorial Production Partners

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, 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 289.9% when compared to the same quarter one year ago, falling from $101.16 million to -$192.09 million.
  • The debt-to-equity ratio is very high at 3.17 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.38, which clearly demonstrates the inability to cover short-term cash needs.
  • 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, MEMORIAL PRODUCTION PRTRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $73.85 million or 15.81% when compared to the same quarter last year. Despite a decrease in cash flow MEMORIAL PRODUCTION PRTRS LP is still fairing well by exceeding its industry average cash flow growth rate of -26.87%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 84.75%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 266.18% 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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CorEnergy Infrastructure

Dividend Yield: 12.00%

CorEnergy Infrastructure

(NYSE:

CORR

) shares currently have a dividend yield of 12.00%.

CorEnergy Infrastructure Trust, Inc. is an open-ended equity trust launched and managed by Corridor InfraTrust Management, LLC. The trust primarily owns midstream and downstream U.S. energy infrastructure assets subject to long-term triple net participating leases with energy companies. The company has a P/E ratio of 71.29.

The average volume for CorEnergy Infrastructure has been 70,600 shares per day over the past 30 days. CorEnergy Infrastructure has a market cap of $297.6 million and is part of the real estate industry. Shares are up 270.8% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

CorEnergy Infrastructure

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in 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 77.4% when compared to the same quarter one year ago, falling from $1.89 million to $0.43 million.
  • 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, CORENERGY INFRASTRUCTURE TR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CORENERGY INFRASTRUCTURE TR is rather low; currently it is at 22.72%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 1.90% significantly trails 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 53.55%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 116.66% 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.
  • CORENERGY INFRASTRUCTURE TR 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, CORENERGY INFRASTRUCTURE TR increased its bottom line by earning $1.15 versus $0.90 in the prior year. For the next year, the market is expecting a contraction of 5.0% in earnings ($1.09 versus $1.15).

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