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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."

Overseas Shipholding Group

Dividend Yield: 14.90%

Overseas Shipholding Group

(AMEX:

OSGB

) shares currently have a dividend yield of 14.90%.

Overseas Shipholding Group, Inc. primarily engages in the ocean transportation of crude oil and petroleum products. The company has a P/E ratio of 4.39.

The average volume for Overseas Shipholding Group has been 53,200 shares per day over the past 30 days. Overseas Shipholding Group has a market cap of $800.4 million and is part of the transportation industry. Shares are down 34.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Overseas Shipholding Group

TheStreet Recommends

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, unimpressive growth in net income and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 42.82%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 60.00% 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 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 65.1% when compared to the same quarter one year ago, falling from $26.53 million to $9.27 million.
  • OVERSEAS SHIPHOLDING GROUP 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, OVERSEAS SHIPHOLDING GROUP turned its bottom line around by earning $0.54 versus -$6.12 in the prior year. For the next year, the market is expecting a contraction of 20.4% in earnings ($0.43 versus $0.54).
  • OSGB's debt-to-equity ratio of 0.84 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 3.91 is very high and demonstrates very strong liquidity.
  • 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, OVERSEAS SHIPHOLDING GROUP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.

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Tronox

Dividend Yield: 15.60%

Tronox

(NYSE:

TROX

) shares currently have a dividend yield of 15.60%.

Tronox Limited produces and markets titanium bearing mineral sands and titanium dioxide (TiO2) pigment in North America, Europe, South Africa, and the Asia-Pacific region. It primarily operates in two segments, TiO2 and Alkali. The company has a P/E ratio of 2.32.

The average volume for Tronox has been 1,233,000 shares per day over the past 30 days. Tronox has a market cap of $739.6 million and is part of the chemicals industry. Shares are up 75.2% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Tronox

as a

sell

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

Highlights from the ratings report include:

  • 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 Chemicals industry and the overall market, TRONOX LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for TRONOX LTD is rather low; currently it is at 18.32%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -16.82% is significantly below that of the industry average.
  • The debt-to-equity ratio is very high at 3.13 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, TROX's quick ratio is somewhat strong at 1.14, demonstrating the ability to handle short-term liquidity needs.
  • TROX'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 68.57%, 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.
  • TRONOX LTD 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, TRONOX LTD continued to lose money by earning -$2.75 versus -$3.73 in the prior year. This year, the market expects an improvement in earnings (-$0.95 versus -$2.75).

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Ladder Capital

Dividend Yield: 8.80%

Ladder Capital

(NYSE:

LADR

) shares currently have a dividend yield of 8.80%.

Ladder Capital Corp operates as a real estate investment trust in the United States. The company operates through three segments: Loans, Securities, and Real Estate. The company has a P/E ratio of 8.77.

The average volume for Ladder Capital has been 342,000 shares per day over the past 30 days. Ladder Capital has a market cap of $1.4 billion and is part of the real estate industry. Shares are down 3.1% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Ladder Capital

as a

sell

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

Highlights from the ratings report include:

  • Net operating cash flow has declined marginally to -$165.54 million or 4.74% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, LADDER CAPITAL CORP has marginally lower results.
  • LADR'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 32.74%, 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, LADDER CAPITAL CORP's return on equity is below that of both the industry average and the S&P 500.
  • LADR, with its decline in revenue, underperformed when compared the industry average of 7.9%. Since the same quarter one year prior, revenues slightly dropped by 8.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for LADDER CAPITAL CORP is currently very high, coming in at 76.15%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 22.55% trails the industry average.

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