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."

Five Oaks Investment

Dividend Yield: 18.90%

Five Oaks Investment

(NYSE:

OAKS

) shares currently have a dividend yield of 18.90%.

Five Oaks Investment Corp. focuses on investing, financing, and managing a portfolio of mortgage-backed securities (MBS). It invests in agency and non-agency residential MBS, multi-family MBS, residential mortgage loans, mortgage servicing rights, and other mortgage-related investments.

The average volume for Five Oaks Investment has been 107,900 shares per day over the past 30 days. Five Oaks Investment has a market cap of $93.5 million and is part of the real estate industry. Shares are down 40.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Five Oaks Investment

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, 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 compared to the Real Estate Investment Trusts (REITs) industry average, but is greater than that of the S&P 500. The net income has decreased by 8.8% when compared to the same quarter one year ago, dropping from $4.42 million to $4.03 million.
  • Net operating cash flow has significantly decreased to $0.67 million or 84.11% 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 42.25%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 38.23% 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.
  • FIVE OAKS INVESTMENT CORP's earnings per share declined by 38.2% in the most recent quarter compared to 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, FIVE OAKS INVESTMENT CORP swung to a loss, reporting -$0.03 versus $0.42 in the prior year. This year, the market expects an improvement in earnings ($1.24 versus -$0.03).
  • 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, FIVE OAKS INVESTMENT CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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American Capital Mortgage Investment

Dividend Yield: 13.10%

American Capital Mortgage Investment

(NASDAQ:

MTGE

) shares currently have a dividend yield of 13.10%.

American Capital Mortgage Investment Corp. operates as a real estate investment trust (REIT) in the United States. The company has a P/E ratio of 61.12.

The average volume for American Capital Mortgage Investment has been 434,000 shares per day over the past 30 days. American Capital Mortgage Investment has a market cap of $782.2 million and is part of the real estate industry. Shares are down 17.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

TheStreet Recommends

American Capital Mortgage Investment

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, deteriorating net income, disappointing return on equity, weak operating cash flow and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • The share price of AMERICAN CAPITAL MTG INV CP has not done very well: it is down 24.71% 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. 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, 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 147.4% when compared to the same quarter one year ago, falling from $84.30 million to -$39.96 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, AMERICAN CAPITAL MTG INV CP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $37.95 million or 5.40% 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.
  • AMERICAN CAPITAL MTG INV CP 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, AMERICAN CAPITAL MTG INV CP turned its bottom line around by earning $3.06 versus -$1.58 in the prior year. For the next year, the market is expecting a contraction of 35.3% in earnings ($1.98 versus $3.06).

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Navios Maritime Holdings

Dividend Yield: 8.70%

Navios Maritime Holdings

(NYSE:

NM

) shares currently have a dividend yield of 8.70%.

Navios Maritime Holdings Inc. operates as a seaborne shipping and logistics company. It focuses on the transportation and transshipment of dry bulk commodities, including iron ore, coal, and grains. It operates in two segments, Dry bulk Vessel Operations and Logistics Business.

The average volume for Navios Maritime Holdings has been 767,600 shares per day over the past 30 days. Navios Maritime Holdings has a market cap of $298.7 million and is part of the transportation industry. Shares are down 29.9% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Navios Maritime Holdings

as a

sell

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

Highlights from the ratings report include:

  • The gross profit margin for NAVIOS MARITIME HOLDINGS INC is rather low; currently it is at 21.89%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -20.70% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $2.10 million or 80.85% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • NM'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 70.00%, 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 debt-to-equity ratio of 1.48 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, NM has managed to keep a strong quick ratio of 1.54, which demonstrates the ability to cover short-term cash needs.
  • 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. Compared to other companies in the Marine industry and the overall market, NAVIOS MARITIME HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.

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