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."

Capstead Mortgage

Dividend Yield: 9.70%

Capstead Mortgage

(NYSE:

CMO

) shares currently have a dividend yield of 9.70%.

Capstead Mortgage Corporation operates as real estate investment trust (REIT) in the United States. The company has a P/E ratio of 10.58.

The average volume for Capstead Mortgage has been 892,100 shares per day over the past 30 days. Capstead Mortgage has a market cap of $913.4 million and is part of the real estate industry. Shares are up 9.9% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Capstead Mortgage

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

Highlights from the ratings report include:

  • CAPSTEAD MORTGAGE CORP's earnings per share declined by 21.9% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, CAPSTEAD MORTGAGE CORP reported lower earnings of $0.98 versus $1.33 in the prior year. For the next year, the market is expecting a contraction of 4.1% in earnings ($0.94 versus $0.98).
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income has decreased by 19.4% when compared to the same quarter one year ago, dropping from $33.96 million to $27.35 million.
  • 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CAPSTEAD MORTGAGE CORP's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $48.79 million or 17.08% 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.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, CMO has underperformed the S&P 500 Index, declining 17.92% 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.

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Plains GP Holdings

Dividend Yield: 8.90%

Plains GP Holdings

(NYSE:

PAGP

) shares currently have a dividend yield of 8.90%.

Plains GP Holdings, L.P. together with its subsidiaries, owns and operates midstream energy infrastructure in the United States and Canada. It operates through three segments: Transportation, Facilities, and Supply and Logistics. The company has a P/E ratio of 19.53.

The average volume for Plains GP Holdings has been 3,218,500 shares per day over the past 30 days. Plains GP Holdings has a market cap of $6.5 billion and is part of the energy industry. Shares are up 10.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Plains GP Holdings

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, generally disappointing historical performance in the stock itself, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 5.74 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, PAGP has a quick ratio of 0.52, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • PAGP'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 58.91%, which is also worse than the performance of the S&P 500 Index. 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.
  • Net operating cash flow has decreased to $631.00 million or 13.44% when compared to the same quarter last year. Despite a decrease in cash flow PLAINS GP HOLDINGS LP is still fairing well by exceeding its industry average cash flow growth rate of -49.84%.
  • The gross profit margin for PLAINS GP HOLDINGS LP is currently extremely low, coming in at 11.26%. Regardless of PAGP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.87% trails the industry average.
  • PAGP, with its decline in revenue, slightly underperformed the industry average of 24.6%. Since the same quarter one year prior, revenues fell by 30.8%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.

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Euronav

Dividend Yield: 18.00%

Euronav

(NYSE:

EURN

) shares currently have a dividend yield of 18.00%.

Euronav NV, together with its subsidiaries, owns, operates, and manages a fleet of vessels for the ocean transportation and storage of crude oil and petroleum products worldwide. The company operates through two segments, Tankers; and Floating Production, Storage, and Offloading Operations.

The average volume for Euronav has been 1,046,800 shares per day over the past 30 days. Euronav has a market cap of $1.5 billion and is part of the transportation industry. Shares are down 32.5% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Euronav

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:

  • EURN'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 37.10%, 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.
  • EURONAV has improved earnings per share by 41.2% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, EURONAV turned its bottom line around by earning $2.21 versus -$0.28 in the prior year. For the next year, the market is expecting a contraction of 14.3% in earnings ($1.90 versus $2.21).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 40.4% when compared to the same quarter one year prior, rising from $80.86 million to $113.54 million.
  • The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, EURN has a quick ratio of 1.94, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, EURONAV's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.

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