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."

Transocean

Dividend Yield: 4.10%

Transocean

(NYSE:

RIG

) shares currently have a dividend yield of 4.10%.

Transocean Ltd., together with its subsidiaries, provides offshore contract drilling services for oil and gas wells worldwide. The company primarily offers deepwater and harsh environment drilling services. The company has a P/E ratio of 7.91.

The average volume for Transocean has been 14,846,400 shares per day over the past 30 days. Transocean has a market cap of $5.4 billion and is part of the energy industry. Shares are down 16.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Transocean

as a

sell

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

Highlights from the ratings report include:

  • 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 Energy Equipment & Services industry and the overall market, TRANSOCEAN LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 46.03%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 42.94% 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 Energy Equipment & Services industry average, but is less than that of the S&P 500. The net income has significantly decreased by 41.7% when compared to the same quarter one year ago, falling from $587.00 million to $342.00 million.
  • TRANSOCEAN LTD's earnings per share declined by 42.9% 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, TRANSOCEAN LTD swung to a loss, reporting -$5.25 versus $3.85 in the prior year. This year, the market expects an improvement in earnings ($3.35 versus -$5.25).
  • Despite the weak revenue results, RIG has outperformed against the industry average of 31.2%. Since the same quarter one year prior, revenues fell by 19.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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WP Glimcher

Dividend Yield: 8.40%

WP Glimcher

(NYSE:

WPG

) shares currently have a dividend yield of 8.40%.

Washington Prime Group Inc. (NYSE:WPG.WI) operates independently of Simon Property Group Inc. as of May 28, 2014. The company has a P/E ratio of 31.74.

The average volume for WP Glimcher has been 1,162,500 shares per day over the past 30 days. WP Glimcher has a market cap of $2.2 billion and is part of the real estate industry. Shares are down 30.6% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

TST Recommends

WP Glimcher

as a

sell

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

Highlights from the ratings report include:

  • WP GLIMCHER INC 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. For the next year, the market is expecting a contraction of 89.1% in earnings ($0.12 versus $1.10).
  • 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 88.7% when compared to the same quarter one year ago, falling from $69.80 million to $7.90 million.
  • The gross profit margin for WP GLIMCHER INC is currently lower than what is desirable, coming in at 27.04%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 3.34% significantly trails the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 27.20%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 95.55% 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.
  • When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, WP GLIMCHER INC's return on equity is below that of both the industry average and the S&P 500.

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MPLX

Dividend Yield: 5.70%

MPLX

(NYSE:

MPLX

) shares currently have a dividend yield of 5.70%.

MPLX LP owns, operates, develops, and acquires pipelines and other midstream assets related to the transportation and storage of crude oil, refined product, and other hydrocarbon-based products in the United States. The company has a P/E ratio of 20.47.

The average volume for MPLX has been 369,400 shares per day over the past 30 days. MPLX has a market cap of $1.4 billion and is part of the energy industry. Shares are down 49.8% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

MPLX

as a

sell

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

Highlights from the ratings report include:

  • MPLX'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 36.93%, 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. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, MPLX is still more expensive than most of the other companies in its industry.
  • Currently the debt-to-equity ratio of 1.55 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Regardless of the company's weak debt-to-equity ratio, MPLX has managed to keep a strong quick ratio of 1.53, which demonstrates the ability to cover short-term cash needs.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, MPLX LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for MPLX LP is rather high; currently it is at 59.81%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 34.64% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $69.40 million or 22.83% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -19.46%.

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