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."

Quad/Graphics

Dividend Yield: 9.80%

Quad/Graphics

(NYSE:

QUAD

) shares currently have a dividend yield of 9.80%.

Quad/Graphics, Inc., together with its subsidiaries, provides print and media solutions in the United States, Europe, Latin America, and internationally. The company operates in two segments, United States Print and Related Services; and International.

The average volume for Quad/Graphics has been 361,700 shares per day over the past 30 days. Quad/Graphics has a market cap of $612.1 million and is part of the diversified services industry. Shares are up 35% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Quad/Graphics

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and weak operating cash flow.

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 Commercial Services & Supplies industry. The net income has significantly decreased by 136.4% when compared to the same quarter one year ago, falling from $25.80 million to -$9.40 million.
  • The debt-to-equity ratio is very high at 3.18 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, QUAD maintains a poor quick ratio of 0.83, which illustrates the inability to avoid short-term cash problems.
  • 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 Commercial Services & Supplies industry and the overall market, QUAD/GRAPHICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for QUAD/GRAPHICS INC is rather low; currently it is at 20.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.70% trails that of the industry average.
  • Net operating cash flow has decreased to $168.90 million or 22.66% 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.

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Institutional Financial Markets

Dividend Yield: 9.20%

Institutional Financial Markets

(AMEX:

IFMI

) shares currently have a dividend yield of 9.20%.

Institutional Financial Markets, Inc. is a publicly owned investment manager. The firm primarily provides its services to individuals and institutions. It manages separate client-focused fixed income portfolios. Institutional Financial Markets, Inc.

The average volume for Institutional Financial Markets has been 16,400 shares per day over the past 30 days. Institutional Financial Markets has a market cap of $12.2 million and is part of the financial services industry. Shares are down 25% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Institutional Financial Markets

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The gross profit margin for INSTITUTIONAL FINANCIAL MKTS is currently extremely low, coming in at 5.48%. Regardless of IFMI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, IFMI's net profit margin of -4.12% significantly underperformed when compared to the industry average.
  • IFMI'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 45.17%, 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 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. When compared to other companies in the Capital Markets industry and the overall market, INSTITUTIONAL FINANCIAL MKTS's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 50.51% to -$0.97 million when compared to the same quarter last year. Despite an increase in cash flow of 50.51%, INSTITUTIONAL FINANCIAL MKTS is still growing at a significantly lower rate than the industry average of 143.97%.
  • INSTITUTIONAL FINANCIAL MKTS 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. During the past fiscal year, INSTITUTIONAL FINANCIAL MKTS continued to lose money by earning -$0.17 versus -$1.09 in the prior year.

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Hoegh LNG Partners

Dividend Yield: 9.60%

Hoegh LNG Partners

(NYSE:

HMLP

) shares currently have a dividend yield of 9.60%.

Hoegh LNG Partners LP focuses on owning, operating, and acquiring floating storage and regasification units, liquefied natural gas (LNG) carriers, and other LNG infrastructure assets under long-term charters. Hoegh LNG GP LLC is the general partner of the company. The company has a P/E ratio of 11.12.

The average volume for Hoegh LNG Partners has been 43,400 shares per day over the past 30 days. Hoegh LNG Partners has a market cap of $453.6 million and is part of the transportation industry. Shares are down 6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Hoegh LNG Partners

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:

  • Currently the debt-to-equity ratio of 1.65 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.45, which clearly demonstrates the inability to cover short-term cash needs.
  • HMLP has underperformed the S&P 500 Index, declining 19.68% from its price level of one year ago. 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.
  • HOEGH LNG PARTNERS LP 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, HOEGH LNG PARTNERS LP increased its bottom line by earning $1.54 versus $0.04 in the prior year. This year, the market expects an improvement in earnings ($1.76 versus $1.54).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 217.3% when compared to the same quarter one year prior, rising from $5.19 million to $16.46 million.
  • The gross profit margin for HOEGH LNG PARTNERS LP is currently very high, coming in at 82.34%. It has increased significantly from the same period last year. Along with this, the net profit margin of 70.24% significantly outperformed against the industry average.

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