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."

Apollo Residential Mortgage

Dividend Yield: 15.20%

Apollo Residential Mortgage

(NYSE:

AMTG

) shares currently have a dividend yield of 15.20%.

Apollo Residential Mortgage, Inc. primarily invests in residential mortgage assets in the United States.

The average volume for Apollo Residential Mortgage has been 235,100 shares per day over the past 30 days. Apollo Residential Mortgage has a market cap of $402.2 million and is part of the real estate industry. Shares are down 20.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Apollo Residential Mortgage

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 300.2% when compared to the same quarter one year ago, falling from $10.88 million to -$21.78 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, APOLLO RESIDENTIAL MTG INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of APOLLO RESIDENTIAL MTG INC has not done very well: it is down 22.96% 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.
  • APOLLO RESIDENTIAL MTG 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, APOLLO RESIDENTIAL MTG INC turned its bottom line around by earning $2.54 versus -$1.91 in the prior year. For the next year, the market is expecting a contraction of 16.3% in earnings ($2.13 versus $2.54).
  • The gross profit margin for APOLLO RESIDENTIAL MTG INC is currently very high, coming in at 84.44%. Regardless of AMTG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AMTG's net profit margin of -53.16% significantly underperformed when compared to the industry average.

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Anworth Mortgage Asset

Dividend Yield: 12.70%

Anworth Mortgage Asset

(NYSE:

ANH

) shares currently have a dividend yield of 12.70%.

Anworth Mortgage Asset Corporation operates as a real estate investment trust in the United States.

The average volume for Anworth Mortgage Asset has been 1,065,200 shares per day over the past 30 days. Anworth Mortgage Asset has a market cap of $473.5 million and is part of the real estate industry. Shares are down 10.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

TheStreet Recommends

Anworth Mortgage Asset

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 generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • ANWORTH MTG ASSET CORP 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, ANWORTH MTG ASSET CORP reported lower earnings of $0.18 versus $0.49 in the prior year. For the next year, the market is expecting a contraction of 144.4% in earnings (-$0.08 versus $0.18).
  • 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 211.9% when compared to the same quarter one year ago, falling from $19.49 million to -$21.81 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 Real Estate Investment Trusts (REITs) industry and the overall market, ANWORTH MTG ASSET CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of ANWORTH MTG ASSET CORP has not done very well: it is down 10.80% 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 ANWORTH MTG ASSET CORP is currently very high, coming in at 90.34%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -58.65% is in-line with the industry average.

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Deswell Industries

Dividend Yield: 10.10%

Deswell Industries

(NASDAQ:

DSWL

) shares currently have a dividend yield of 10.10%.

Deswell Industries, Inc. manufactures and sells injection-molded plastic parts and components; and assembles electronic products for original equipment manufacturers and contract manufacturers.

The average volume for Deswell Industries has been 15,100 shares per day over the past 30 days. Deswell Industries has a market cap of $22.3 million and is part of the consumer non-durables industry. Shares are down 22.2% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Deswell Industries

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins and weak operating cash flow.

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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 7935.7% when compared to the same quarter one year ago, falling from $0.01 million to -$1.10 million.
  • The gross profit margin for DESWELL INDUSTRIES INC is currently extremely low, coming in at 12.22%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -9.73% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$2.30 million or 125.34% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, DESWELL INDUSTRIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • This stock's share value has moved by only 35.65% over the past year. 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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