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."

Great Ajax

Dividend Yield: 9.20%

Great Ajax

(NYSE:

AJX

) shares currently have a dividend yield of 9.20%.

Great Ajax Corp. focuses primarily on acquiring, investing in, and managing a portfolio of re-performing and non-performing mortgage loans secured by single-family residences and single-family properties. The company has a P/E ratio of 6.24.

The average volume for Great Ajax has been 37,600 shares per day over the past 30 days. Great Ajax has a market cap of $167.1 million and is part of the real estate industry. Shares are down 13.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Great Ajax

as a

sell

. The area that we feel has been the company's primary weakness has been its generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • AJX'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 25.18%, 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.
  • When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, GREAT AJAX CORP's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for GREAT AJAX CORP is currently very high, coming in at 79.26%. It has increased significantly from the same period last year. Along with this, the net profit margin of 50.41% significantly outperformed against the industry average.
  • GREAT AJAX CORP 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, GREAT AJAX CORP increased its bottom line by earning $1.62 versus $0.22 in the prior year. This year, the market expects an improvement in earnings ($2.42 versus $1.62).

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Cypress Energy Partners

Dividend Yield: 18.70%

Cypress Energy Partners

(NYSE:

CELP

) shares currently have a dividend yield of 18.70%.

Cypress Energy Partners, L.P. provides saltwater disposal (SWD), and other water and environmental services in North America. It operates in two segments: Water and Environmental Services (W&ES), and Pipeline Inspection and Integrity Services (PI&IS).

The average volume for Cypress Energy Partners has been 37,400 shares per day over the past 30 days. Cypress Energy Partners has a market cap of $102.7 million and is part of the energy industry. Shares are down 2.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

TheStreet Recommends

Cypress 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, poor profit margins, generally high debt management risk and generally disappointing historical performance in the stock itself.

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 150.9% when compared to the same quarter one year ago, falling from $3.56 million to -$1.81 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 Commercial Services & Supplies industry and the overall market, CYPRESS ENERGY PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CYPRESS ENERGY PARTNERS LP is currently extremely low, coming in at 12.55%. Regardless of CELP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CELP's net profit margin of -1.87% significantly underperformed when compared to the industry average.
  • The debt-to-equity ratio is very high at 4.10 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 4.04, which shows the ability to cover short-term cash needs.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 40.03%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 150.00% 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.

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Cherry Hill Mortgage Investment

Dividend Yield: 13.80%

Cherry Hill Mortgage Investment

(NYSE:

CHMI

) shares currently have a dividend yield of 13.80%.

Cherry Hill Mortgage Investment Corporation, a residential real estate finance company, acquires, invests in, and manages residential mortgage assets in the United States. The company has a P/E ratio of 33.88.

The average volume for Cherry Hill Mortgage Investment has been 31,700 shares per day over the past 30 days. Cherry Hill Mortgage Investment has a market cap of $107.0 million and is part of the real estate industry. Shares are up 9.9% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Cherry Hill Mortgage Investment

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 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 283.8% when compared to the same quarter one year ago, falling from $2.79 million to -$5.12 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 Real Estate Investment Trusts (REITs) industry and the overall market, CHERRY HILL MTG INVST's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of CHERRY HILL MTG INVST has not done very well: it is down 20.89% 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.
  • CHERRY HILL MTG INVST 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, CHERRY HILL MTG INVST reported lower earnings of $0.31 versus $2.83 in the prior year. This year, the market expects an improvement in earnings ($1.94 versus $0.31).
  • CHMI, with its decline in revenue, underperformed when compared the industry average of 7.9%. Since the same quarter one year prior, revenues fell by 15.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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