Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer

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."

Baytex Energy

Dividend Yield: 9.40%

Baytex Energy

(NYSE:

BTE

) shares currently have a dividend yield of 9.40%.

Baytex Energy Corp., an oil and gas company, engages in the acquisition, development, exploitation, and production of oil and natural gas in the Western Canadian Sedimentary Basin and the United States. The company offers heavy oil, light oil, condensate, and natural gas liquids.

The average volume for Baytex Energy has been 658,300 shares per day over the past 30 days. Baytex Energy has a market cap of $1.7 billion and is part of the energy industry. Shares are down 46% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Baytex Energy

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:

  • BAYTEX ENERGY 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. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, BAYTEX ENERGY CORP swung to a loss, reporting -$0.65 versus $1.32 in the prior year.
  • 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 467.7% when compared to the same quarter one year ago, falling from $47.84 million to -$175.92 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 Oil, Gas & Consumable Fuels industry and the overall market, BAYTEX ENERGY CORP's return on equity significantly trails that of both the industry average and 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 76.49%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 373.68% 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.
  • 46.97% is the gross profit margin for BAYTEX ENERGY CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, BTE's net profit margin of -76.85% significantly underperformed when compared to the industry average.

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Azure Midstream Partners

Dividend Yield: 14.30%

Azure Midstream Partners

(NYSE:

AZUR

) shares currently have a dividend yield of 14.30%.

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 8.41.

The average volume for Azure Midstream Partners has been 133,300 shares per day over the past 30 days. Azure Midstream Partners has a market cap of $95.2 million and is part of the energy industry. Shares are down 46.8% year-to-date as of the close of trading on Monday.

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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 weak operating cash flow, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • Net operating cash flow has significantly decreased to -$2.60 million or 129.37% 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 gross profit margin for AZURE MIDSTREAM PARTNERS LP is currently lower than what is desirable, coming in at 28.94%. Regardless of AZUR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, AZUR's net profit margin of -9.89% significantly underperformed when compared to the industry average.
  • AZUR'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 48.81%, 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. 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.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, AZURE MIDSTREAM PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • AZURE MIDSTREAM PARTNERS LP 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. However, we anticipate underperformance relative to this pattern 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).

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Rait Financial

Dividend Yield: 13.00%

Rait Financial

(NYSE:

RAS

) shares currently have a dividend yield of 13.00%.

RAIT Financial Trust operates as a self-managed and self-advised real estate investment trust (REIT). The company, through its subsidiaries, invests in, manages, and services real estate-related assets with a focus on commercial real estate.

The average volume for Rait Financial has been 546,100 shares per day over the past 30 days. Rait Financial has a market cap of $459.2 million and is part of the real estate industry. Shares are down 28% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Rait Financial

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins, weak operating cash flow 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, RAIT FINANCIAL TRUST's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for RAIT FINANCIAL TRUST is rather low; currently it is at 19.46%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 0.92% significantly trails the industry average.
  • Net operating cash flow has significantly decreased to -$12.99 million or 158.31% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • RAS'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 31.66%, 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. 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.
  • RAIT FINANCIAL TRUST 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, RAIT FINANCIAL TRUST continued to lose money by earning -$3.88 versus -$4.58 in the prior year. This year, the market expects an improvement in earnings (-$0.26 versus -$3.88).

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