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."

Bank of Nova Scotia

Dividend Yield: 4.60%

Bank of Nova Scotia

(NYSE:

BNS

) shares currently have a dividend yield of 4.60%.

The Bank of Nova Scotia provides various personal, commercial, corporate, and investment banking services in Canada and internationally. The company has a P/E ratio of 12.00.

The average volume for Bank of Nova Scotia has been 927,100 shares per day over the past 30 days. Bank of Nova Scotia has a market cap of $58.3 billion and is part of the banking industry. Shares are up 22.8% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Bank of Nova Scotia

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:

  • BNS has underperformed the S&P 500 Index, declining 10.29% 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.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Commercial Banks industry and the overall market, BANK OF NOVA SCOTIA's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for BANK OF NOVA SCOTIA is currently very high, coming in at 72.79%. 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 21.19% trails the industry average.
  • BANK OF NOVA SCOTIA has improved earnings per share by 5.9% in the most recent quarter compared to the same quarter a year ago. Stable Earnings per share over the past year indicate the company has sound management over its earnings and share float. During the past fiscal year, BANK OF NOVA SCOTIA increased its bottom line by earning $5.67 versus $5.66 in the prior year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Commercial Banks industry average. The net income increased by 4.7% when compared to the same quarter one year prior, going from $1,679.00 million to $1,758.00 million.

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Williams Companies

Dividend Yield: 11.60%

Williams Companies

(NYSE:

WMB

) shares currently have a dividend yield of 11.60%.

The Williams Companies, Inc. operates as an energy infrastructure company primarily in the United States. The company operates through Williams Partners, Williams NGL (natural gas liquids) & Petchem Services, and Other segments. The company has a P/E ratio of 38.16.

The average volume for Williams Companies has been 11,801,800 shares per day over the past 30 days. Williams Companies has a market cap of $16.6 billion and is part of the energy industry. Shares are down 17.3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Williams Companies

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 192.8% when compared to the same quarter one year ago, falling from $70.00 million to -$65.00 million.
  • The debt-to-equity ratio is very high at 4.36 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.32, which clearly demonstrates the inability to cover short-term cash needs.
  • 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, WILLIAMS COS 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 59.42%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 200.00% 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.
  • WILLIAMS COS 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, WILLIAMS COS INC swung to a loss, reporting -$0.76 versus $2.82 in the prior year. This year, the market expects an improvement in earnings ($0.69 versus -$0.76).

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Crestwood Equity Partners

Dividend Yield: 11.90%

Crestwood Equity Partners

(NYSE:

CEQP

) shares currently have a dividend yield of 11.90%.

Crestwood Equity Partners LP provides infrastructure solutions to liquids-rich natural gas and crude oil shale plays in the United States. It operates through three segments: Gathering and Processing; Storage and Transportation; and Marketing, Supply, and Logistics.

The average volume for Crestwood Equity Partners has been 1,027,500 shares per day over the past 30 days. Crestwood Equity Partners has a market cap of $1.4 billion and is part of the energy industry. Shares are up 2.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Crestwood Equity Partners

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, 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 1300.0% when compared to the same quarter one year ago, falling from $8.30 million to -$99.60 million.
  • The gross profit margin for CRESTWOOD EQUITY PARTNERS LP is currently lower than what is desirable, coming in at 32.20%. Regardless of CEQP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CEQP's net profit margin of -18.58% significantly underperformed when compared to the industry average.
  • Net operating cash flow has decreased to $134.30 million or 14.24% when compared to the same quarter last year. Despite a decrease in cash flow CRESTWOOD EQUITY PARTNERS LP is still fairing well by exceeding its industry average cash flow growth rate of -49.17%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 64.16%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 467.50% 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.
  • CRESTWOOD EQUITY PARTNERS LP 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CRESTWOOD EQUITY PARTNERS LP swung to a loss, reporting -$34.27 versus $3.20 in the prior year. This year, the market expects an improvement in earnings (-$1.25 versus -$34.27).

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