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."

Azure Midstream Partners

Dividend Yield: 18.00%

Azure Midstream Partners

(NYSE:

AZUR

) shares currently have a dividend yield of 18.00%.

Azure Midstream Partners, LP acquires, owns, develops, and operates midstream energy assets in the United States. It operates through two segments, Gathering and Processing, and Logistics. The company has a P/E ratio of 6.13.

The average volume for Azure Midstream Partners has been 142,900 shares per day over the past 30 days. Azure Midstream Partners has a market cap of $105.1 million and is part of the energy industry. Shares are down 52.8% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Azure Midstream Partners

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, 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 against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 73.2% when compared to the same quarter one year ago, falling from $6.34 million to $1.70 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 57.24%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 47.22% compared to the year-earlier quarter. 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.
  • AZURE MIDSTREAM PARTNERS LP's earnings per share declined by 47.2% in the most recent quarter compared to 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, AZURE MIDSTREAM PARTNERS LP increased its bottom line by earning $0.87 versus $0.36 in the prior year. For the next year, the market is expecting a contraction of 65.5% in earnings ($0.30 versus $0.87).
  • Despite the weak revenue results, AZUR has significantly outperformed against the industry average of 34.6%. Since the same quarter one year prior, revenues slightly dropped by 4.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 44.54% is the gross profit margin for AZURE MIDSTREAM PARTNERS LP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 7.92% is above that of the industry average.

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Hugoton Royalty

Dividend Yield: 8.70%

Hugoton Royalty

(NYSE:

HGT

) shares currently have a dividend yield of 8.70%.

Hugoton Royalty Trust operates as an express trust in the United States. The company holds an 80% net profits interests in certain natural gas producing working interest properties of XTO Energy Inc. XTO Energy Inc. The company has a P/E ratio of 2.40.

The average volume for Hugoton Royalty has been 142,200 shares per day over the past 30 days. Hugoton Royalty has a market cap of $102.8 million and is part of the energy industry. Shares are down 70.2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

TheStreet Recommends

Hugoton Royalty

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income 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 93.3% when compared to the same quarter one year ago, falling from $17.85 million to $1.19 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 73.81%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 93.33% 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.
  • 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, HUGOTON ROYALTY TRUST's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • HUGOTON ROYALTY TRUST 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 not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, HUGOTON ROYALTY TRUST increased its bottom line by earning $1.09 versus $0.87 in the prior year.
  • HGT, with its very weak revenue results, has greatly underperformed against the industry average of 34.6%. Since the same quarter one year prior, revenues plummeted by 91.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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Anworth Mortgage Asset

Dividend Yield: 12.00%

Anworth Mortgage Asset

(NYSE:

ANH

) shares currently have a dividend yield of 12.00%.

Anworth Mortgage Asset Corporation operates as a real estate investment trust in the United States. The company has a P/E ratio of 250.50.

The average volume for Anworth Mortgage Asset has been 614,300 shares per day over the past 30 days. Anworth Mortgage Asset has a market cap of $514.3 million and is part of the real estate industry. Shares are down 4.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Anworth Mortgage Asset

as a

sell

. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity.

Highlights from the ratings report include:

  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. 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.
  • After a year of stock price fluctuations, the net result is that ANH's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • ANH, with its decline in revenue, underperformed when compared the industry average of 9.7%. Since the same quarter one year prior, revenues fell by 17.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • ANWORTH MTG ASSET CORP 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, ANWORTH MTG ASSET CORP reported lower earnings of $0.18 versus $0.49 in the prior year. This year, the market expects an improvement in earnings ($0.28 versus $0.18).
  • The gross profit margin for ANWORTH MTG ASSET CORP is currently very high, coming in at 90.15%. Regardless of ANH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ANH's net profit margin of 56.17% significantly outperformed against the industry.

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