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."

Alon USA Energy

Dividend Yield: 8.80%

Alon USA Energy

(NYSE:

ALJ

) shares currently have a dividend yield of 8.80%.

Alon USA Energy, Inc. refines and markets petroleum products, primarily in the South Central, Southwestern, and Western regions of the United States. It operates in three segments: Refining and Marketing, Asphalt, and Retail.

The average volume for Alon USA Energy has been 1,240,900 shares per day over the past 30 days. Alon USA Energy has a market cap of $487.0 million and is part of the energy industry. Shares are down 55.7% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Alon USA Energy

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, poor profit margins, weak operating cash flow, disappointing return on equity 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 231.9% when compared to the same quarter one year ago, falling from $26.94 million to -$35.54 million.
  • The gross profit margin for ALON USA ENERGY INC is currently extremely low, coming in at 5.56%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -4.27% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$29.35 million or 52.70% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, ALON USA ENERGY INC has marginally lower results.
  • 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. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ALON USA ENERGY INC's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of 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 63.56%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 234.21% 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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WP Glimcher

Dividend Yield: 9.10%

WP Glimcher

(NYSE:

WPG

) shares currently have a dividend yield of 9.10%.

Washington Prime Group Inc. (NYSE:WPG.WI) operates independently of Simon Property Group Inc. as of May 28, 2014.

The average volume for WP Glimcher has been 1,996,400 shares per day over the past 30 days. WP Glimcher has a market cap of $2.0 billion and is part of the real estate industry. Shares are up 0.7% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

WP Glimcher

as a

sell

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

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 Real Estate Investment Trusts (REITs) industry and the overall market, WP GLIMCHER INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for WP GLIMCHER INC is currently lower than what is desirable, coming in at 32.55%. Regardless of WPG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, WPG's net profit margin of 5.75% is significantly lower than the industry average.
  • WPG has underperformed the S&P 500 Index, declining 20.42% 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.
  • WPG, with its decline in revenue, underperformed when compared the industry average of 12.0%. Since the same quarter one year prior, revenues fell by 12.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • WP GLIMCHER 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, WP GLIMCHER INC swung to a loss, reporting -$0.55 versus $1.10 in the prior year. This year, the market expects an improvement in earnings ($0.33 versus -$0.55).

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American Capital Mortgage Investment

Dividend Yield: 10.10%

American Capital Mortgage Investment

(NASDAQ:

MTGE

) shares currently have a dividend yield of 10.10%.

American Capital Mortgage Investment Corp. operates as a real estate investment trust (REIT) in the United States.

The average volume for American Capital Mortgage Investment has been 488,700 shares per day over the past 30 days. American Capital Mortgage Investment has a market cap of $722.5 million and is part of the real estate industry. Shares are up 12.7% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

American Capital 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, weak operating cash flow, 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 168.6% when compared to the same quarter one year ago, falling from $31.06 million to -$21.30 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, AMERICAN CAPITAL MTG INV CP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $23.90 million or 18.87% 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.
  • The share price of AMERICAN CAPITAL MTG INV CP has not done very well: it is down 9.72% 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.
  • AMERICAN CAPITAL MTG INV CP 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, AMERICAN CAPITAL MTG INV CP swung to a loss, reporting -$0.84 versus $3.06 in the prior year. This year, the market expects an improvement in earnings ($1.70 versus -$0.84).

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