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."

AG Mortgage Investment

Dividend Yield: 13.30%

AG Mortgage Investment

(NYSE:

MITT

) shares currently have a dividend yield of 13.30%.

AG Mortgage Investment Trust, Inc., a real estate investment trust, focuses on investing in, acquiring, and managing a portfolio of residential mortgage assets, other real estate-related securities, and financial assets.

The average volume for AG Mortgage Investment has been 164,400 shares per day over the past 30 days. AG Mortgage Investment has a market cap of $403.7 million and is part of the real estate industry. Shares are up 12.4% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

AG Mortgage Investment

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, 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 119.2% when compared to the same quarter one year ago, falling from $12.76 million to -$2.45 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, AG MORTGAGE INVESTMENT TRUST's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $14.65 million or 37.11% 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.
  • The share price of AG MORTGAGE INVESTMENT TRUST has not done very well: it is down 24.79% 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. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • AG MORTGAGE INVESTMENT TRUST 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, AG MORTGAGE INVESTMENT TRUST reported lower earnings of $0.01 versus $3.38 in the prior year. This year, the market expects an improvement in earnings ($1.72 versus $0.01).

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Independence Realty

Dividend Yield: 9.40%

Independence Realty

(AMEX:

IRT

) shares currently have a dividend yield of 9.40%.

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 company has a P/E ratio of 9.72.

The average volume for Independence Realty has been 340,000 shares per day over the past 30 days. Independence Realty has a market cap of $364.5 million and is part of the real estate industry. Shares are up 0.5% year-to-date as of the close of trading on Monday.

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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 weak operating cash flow, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • Net operating cash flow has decreased to $7.46 million or 12.30% 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.
  • The gross profit margin for INDEPENDENCE REALTY TRUST is rather low; currently it is at 21.53%. 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 -0.19% significantly underperformed when compared to the industry average.
  • IRT has underperformed the S&P 500 Index, declining 10.25% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, INDEPENDENCE REALTY TRUST's return on equity is below that of both the industry average and the S&P 500.
  • 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 $0.80 versus $0.19 in the prior year. For the next year, the market is expecting a contraction of 53.8% in earnings ($0.37 versus $0.80).

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Navios Maritime Midstream Partners

Dividend Yield: 13.90%

Navios Maritime Midstream Partners

(NYSE:

NAP

) shares currently have a dividend yield of 13.90%.

Navios Maritime Midstream Partners L.P. owns, operates, and acquires crude oil tankers, refined petroleum product tankers, chemical tankers, and liquefied petroleum gas tankers under long-term employment contracts. The company has a P/E ratio of 9.17.

The average volume for Navios Maritime Midstream Partners has been 71,700 shares per day over the past 30 days. Navios Maritime Midstream Partners has a market cap of $247.2 million and is part of the transportation industry. Shares are up 5.8% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Navios Maritime Midstream Partners

as a

sell

. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • NAP'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 29.55%, 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. 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.
  • NAP's debt-to-equity ratio of 0.71 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 8.76 is very high and demonstrates very strong liquidity.
  • The gross profit margin for NAVIOS MARITIME MIDSTR PN LP is currently very high, coming in at 95.66%. Regardless of NAP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NAP's net profit margin of 31.03% significantly outperformed against the industry.
  • Net operating cash flow has slightly increased to $9.93 million or 2.30% when compared to the same quarter last year. In addition, NAVIOS MARITIME MIDSTR PN LP has also vastly surpassed the industry average cash flow growth rate of -48.72%.
  • When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, NAVIOS MARITIME MIDSTR PN LP's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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