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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: 14.10%

KNOT Offshore Partners

(NYSE:

KNOP

) shares currently have a dividend yield of 14.10%.

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 13.62.

The average volume for KNOT Offshore Partners has been 101,800 shares per day over the past 30 days. KNOT Offshore Partners has a market cap of $199.4 million and is part of the transportation industry. Shares are down 33.5% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

KNOT Offshore Partners

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TheStreet Recommends

as a

sell

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

Highlights from the ratings report include:

  • The debt-to-equity ratio of 1.18 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • KNOP'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 31.75%, 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.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, KNOT OFFSHORE PRTNRS LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The gross profit margin for KNOT OFFSHORE PRTNRS LP is currently very high, coming in at 80.63%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.62% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 67.58% to $22.00 million when compared to the same quarter last year. In addition, KNOT OFFSHORE PRTNRS LP has also vastly surpassed the industry average cash flow growth rate of -19.71%.

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TriplePoint Venture Growth BDC

Dividend Yield: 14.30%

TriplePoint Venture Growth BDC

(NYSE:

TPVG

) shares currently have a dividend yield of 14.30%.

TriplePoint Venture Growth BDC Corp is a business development company specializing in investments in growth stage. It also provides debt financing to venture growth space companies. The firm seeks to invest in technology and life sciences sector. The company has a P/E ratio of 6.63.

The average volume for TriplePoint Venture Growth BDC has been 85,600 shares per day over the past 30 days. TriplePoint Venture Growth BDC has a market cap of $167.8 million and is part of the financial services industry. Shares are down 31.7% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

TriplePoint Venture Growth BDC

as a

sell

. The area that we feel has been the company's primary weakness has been its generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • TPVG'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 25.55%, 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.
  • When compared to other companies in the Capital Markets industry and the overall market, TRIPLEPOINT VENTURE GWTH BDC's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for TRIPLEPOINT VENTURE GWTH BDC is rather high; currently it is at 64.53%. Regardless of TPVG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TPVG's net profit margin of 60.72% significantly outperformed against the industry.
  • Net operating cash flow has improved to $23.84 million from having none in the same quarter last year. Since the company had no net operating cash flow for the prior period, we cannot calculate a percent change in order to compare its growth rate with that of its industry average.
  • TRIPLEPOINT VENTURE GWTH BDC has improved earnings per share by 48.3% in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($1.54 versus $1.24).

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Armada Hoffler Properties

Dividend Yield: 7.10%

Armada Hoffler Properties

(NYSE:

AHH

) shares currently have a dividend yield of 7.10%.

Armada Hoffler Properties, Inc. is a privately owned real estate investment trust. It invests in real estate markets of Mid-Atlantic United States. The firm is involved in developing, building, owning and managing high-quality, institutional-grade office, retail, and multifamily properties. The company has a P/E ratio of 14.16.

The average volume for Armada Hoffler Properties has been 121,600 shares per day over the past 30 days. Armada Hoffler Properties has a market cap of $249.2 million and is part of the real estate industry. Shares are up 3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Armada Hoffler Properties

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and weak operating cash flow.

Highlights from the ratings report include:

  • The gross profit margin for ARMADA HOFFLER PROPERTIES is currently extremely low, coming in at 13.90%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 9.73% significantly trails the industry average.
  • Net operating cash flow has declined marginally to $5.71 million or 1.29% 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.
  • ARMADA HOFFLER PROPERTIES reported significant earnings per share improvement 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, ARMADA HOFFLER PROPERTIES reported lower earnings of $0.36 versus $0.55 in the prior year. This year, the market expects an improvement in earnings ($0.64 versus $0.36).
  • 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 392.1% when compared to the same quarter one year prior, rising from $1.33 million to $6.52 million.
  • Looking at where the stock is today compared to one year ago, we find that it is higher, and it has outperformed the rise in the S&P 500 over the same period. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.

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