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."

Plains GP Holdings

Dividend Yield: 4.80%

Plains GP Holdings

(NYSE:

PAGP

) shares currently have a dividend yield of 4.80%.

Plains GP Holdings, L.P., through its interest in Plains AAP, L.P., owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids, natural gas, and refined products in the United States and Canada. The company has a P/E ratio of 35.34.

The average volume for Plains GP Holdings has been 1,516,700 shares per day over the past 30 days. Plains GP Holdings has a market cap of $4.2 billion and is part of the energy industry. Shares are down 27.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Plains GP Holdings

as a

sell

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

Highlights from the ratings report include:

  • PAGP has underperformed the S&P 500 Index, declining 16.07% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
  • The debt-to-equity ratio is very high at 5.47 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, PAGP has a quick ratio of 0.64, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has decreased to $729.00 million or 10.77% when compared to the same quarter last year. Despite a decrease in cash flow PLAINS GP HOLDINGS LP is still fairing well by exceeding its industry average cash flow growth rate of -48.80%.
  • The gross profit margin for PLAINS GP HOLDINGS LP is currently extremely low, coming in at 9.32%. Regardless of PAGP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.52% trails the industry average.
  • PAGP, with its decline in revenue, underperformed when compared the industry average of 37.8%. Since the same quarter one year prior, revenues fell by 49.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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Harsco

Dividend Yield: 6.80%

Harsco

(NYSE:

HSC

) shares currently have a dividend yield of 6.80%.

Harsco Corporation provides industrial services and engineered products worldwide. The company operates through three segments: Harsco Metals and Minerals, Harsco Rail, and Harsco Industrial.

The average volume for Harsco has been 946,600 shares per day over the past 30 days. Harsco has a market cap of $960.2 million and is part of the metals & mining industry. Shares are down 38.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Harsco

as a

sell

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

Highlights from the ratings report include:

  • HSC'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 52.16%, 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. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • The debt-to-equity ratio is very high at 3.55 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, HSC maintains a poor quick ratio of 0.76, which illustrates the inability to avoid short-term cash problems.
  • The gross profit margin for HARSCO CORP is rather low; currently it is at 20.92%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.44% trails that of the industry average.
  • Net operating cash flow has decreased to $34.75 million or 25.95% 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 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. Compared to other companies in the Machinery industry and the overall market, HARSCO CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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Marathon Oil

Dividend Yield: 4.20%

Marathon Oil

(NYSE:

MRO

) shares currently have a dividend yield of 4.20%.

Marathon Oil Corporation operates as an energy company. It operates in three segments: North America Exploration and Production, International Exploration and Production, and Oil Sands Mining. The company has a P/E ratio of 44.98.

The average volume for Marathon Oil has been 7,482,700 shares per day over the past 30 days. Marathon Oil has a market cap of $13.4 billion and is part of the energy industry. Shares are down 31.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Marathon Oil

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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 171.5% when compared to the same quarter one year ago, falling from $540.00 million to -$386.00 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 Oil, Gas & Consumable Fuels industry and the overall market, MARATHON OIL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $408.00 million or 62.50% 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.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 48.55%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 207.54% compared to the year-earlier 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.
  • MARATHON OIL CORP 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, MARATHON OIL CORP increased its bottom line by earning $1.41 versus $1.32 in the prior year. For the next year, the market is expecting a contraction of 169.5% in earnings (-$0.98 versus $1.41).

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