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."

Tribune Publishing

Dividend Yield: 8.90%

Tribune Publishing

(NYSE:

TPUB

) shares currently have a dividend yield of 8.90%.

Tribune Publishing Company, a multiplatform media and marketing solutions company, publishes and operates newspapers for audiences and advertisers.

The average volume for Tribune Publishing has been 265,700 shares per day over the past 30 days. Tribune Publishing has a market cap of $206.6 million and is part of the media industry. Shares are down 65.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Tribune Publishing

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, generally high debt management risk, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:

  • TRIBUNE PUBLISHING CO 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 26.7% in earnings ($1.21 versus $1.65).
  • 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 Media industry. The net income has significantly decreased by 77.6% when compared to the same quarter one year ago, falling from $15.20 million to $3.40 million.
  • The debt-to-equity ratio is very high at 28.05 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, TPUB maintains a poor quick ratio of 0.88, which illustrates the inability to avoid short-term cash problems.
  • The gross profit margin for TRIBUNE PUBLISHING CO is currently extremely low, coming in at 5.88%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.82% significantly trails the industry average.
  • Net operating cash flow has declined marginally to $17.69 million or 9.05% 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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Theravance

Dividend Yield: 13.90%

Theravance

(NASDAQ:

THRX

) shares currently have a dividend yield of 13.90%.

Theravance, Inc., a royalty management company, is focused on developing respiratory products.

The average volume for Theravance has been 821,400 shares per day over the past 30 days. Theravance has a market cap of $841.0 million and is part of the drugs industry. Shares are down 46.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Theravance

as a

sell

. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • THRX'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 52.41%, 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.
  • THERAVANCE INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, THERAVANCE INC reported poor results of -$0.66 versus -$0.30 in the prior year. This year, the market expects an improvement in earnings (-$0.16 versus -$0.66).
  • 48.19% is the gross profit margin for THERAVANCE INC which we consider to be strong. 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 -73.29% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 103.99% to $2.17 million when compared to the same quarter last year. In addition, THERAVANCE INC has also vastly surpassed the industry average cash flow growth rate of -10.20%.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 87.7% when compared to the same quarter one year prior, rising from -$63.56 million to -$7.81 million.

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OHA Investment

Dividend Yield: 11.30%

OHA Investment

(NASDAQ:

OHAI

) shares currently have a dividend yield of 11.30%.

OHA Investment Corporation is a business development company specializing in investments in small and mid size and middle market private companies.

The average volume for OHA Investment has been 53,300 shares per day over the past 30 days. OHA Investment has a market cap of $85.3 million and is part of the financial services industry. Shares are down 8.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

OHA Investment

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, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • OHA INVESTMENT CORP's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, OHA INVESTMENT CORP swung to a loss, reporting -$1.08 versus $0.19 in the prior year.
  • 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 Capital Markets industry. The net income has significantly decreased by 1412.5% when compared to the same quarter one year ago, falling from -$0.03 million to -$0.48 million.
  • 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 Capital Markets industry and the overall market, OHA INVESTMENT 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 -$6.27 million or 130.73% when compared to the same quarter last year. Despite a decrease in cash flow of 130.73%, OHA INVESTMENT CORP is still significantly exceeding the industry average of -422.77%.
  • This stock's share value has moved by only 30.94% over the past year. 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.

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