Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer

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."

Rentech Nitrogen Partners

Dividend Yield: 7.90%

Rentech Nitrogen Partners

(NYSE:

RNF

) shares currently have a dividend yield of 7.90%.

Rentech Nitrogen Partners, L.P. produces and sells nitrogen fertilizer products in the United States and internationally. It operates through two segments, East Dubuque and Pasadena.

The average volume for Rentech Nitrogen Partners has been 113,100 shares per day over the past 30 days. Rentech Nitrogen Partners has a market cap of $593.8 million and is part of the chemicals industry. Shares are up 45.3% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Rentech Nitrogen Partners

as a

sell

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

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 62.14 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, RNF has a quick ratio of 0.66, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • 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 Chemicals industry and the overall market, RENTECH NITROGEN PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for RENTECH NITROGEN PARTNERS LP is rather low; currently it is at 17.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -3.68% is significantly below that of the industry average.
  • RNF has underperformed the S&P 500 Index, declining 14.13% 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.
  • RNF, with its decline in revenue, slightly underperformed the industry average of 4.9%. Since the same quarter one year prior, revenues slightly dropped by 9.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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Southcross Energy Partners

Dividend Yield: 11.50%

Southcross Energy Partners

(NYSE:

SXE

) shares currently have a dividend yield of 11.50%.

Southcross Energy Partners, L.P., together with its subsidiaries, provides natural gas gathering, processing, treating, compression, and transportation services in the United States. The company also offers natural gas liquid (NGL) fractionation and transportation services.

The average volume for Southcross Energy Partners has been 164,800 shares per day over the past 30 days. Southcross Energy Partners has a market cap of $332.0 million and is part of the utilities industry. Shares are down 12.1% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Southcross Energy Partners

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself, poor profit margins 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 440.1% when compared to the same quarter one year ago, falling from $0.68 million to -$2.30 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SOUTHCROSS ENERGY PRTNRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of SOUTHCROSS ENERGY PRTNRS LP has not done very well: it is down 18.19% 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. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The gross profit margin for SOUTHCROSS ENERGY PRTNRS LP is currently extremely low, coming in at 8.63%. Regardless of SXE'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 -1.03% trails the industry average.
  • SOUTHCROSS ENERGY PRTNRS LP 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. 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, SOUTHCROSS ENERGY PRTNRS LP reported poor results of -$1.07 versus -$0.72 in the prior year. This year, the market expects an improvement in earnings ($0.29 versus -$1.07).

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Ares Commercial Real Estate

Dividend Yield: 8.90%

Ares Commercial Real Estate

(NYSE:

ACRE

) shares currently have a dividend yield of 8.90%.

Ares Commercial Real Estate Corporation operates as a specialty finance company. The company operates in two segments, Principal Lending and Mortgage Banking. The company has a P/E ratio of 13.16.

The average volume for Ares Commercial Real Estate has been 129,500 shares per day over the past 30 days. Ares Commercial Real Estate has a market cap of $319.9 million and is part of the real estate industry. Shares are down 3.8% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Ares Commercial Real Estate

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 significantly decreased to -$209.81 million or 1140.84% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • ACRE has underperformed the S&P 500 Index, declining 15.10% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • 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, ARES COMMERCIAL REAL ESTATE's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for ARES COMMERCIAL REAL ESTATE is rather high; currently it is at 63.29%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 29.89% trails the industry average.

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