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: 10.80%

Capstead Mortgage

(NYSE:

CMO

) shares currently have a dividend yield of 10.80%.

Capstead Mortgage Corporation operates as real estate investment trust (REIT) in the United States. The company has a P/E ratio of 10.69.

The average volume for Capstead Mortgage has been 852,200 shares per day over the past 30 days. Capstead Mortgage has a market cap of $923.0 million and is part of the real estate industry. Shares are up 10.8% year-to-date as of the close of trading on Tuesday.

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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 19.13% 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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WP Glimcher

Dividend Yield: 10.20%

WP Glimcher

(NYSE:

WPG

) shares currently have a dividend yield of 10.20%.

Washington Prime Group Inc. (NYSE:WPG.WI) operates independently of Simon Property Group Inc. as of May 28, 2014.

The average volume for WP Glimcher has been 1,538,000 shares per day over the past 30 days. WP Glimcher has a market cap of $1.8 billion and is part of the real estate industry. Shares are down 7.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

WP Glimcher

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins 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, WP GLIMCHER INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for WP GLIMCHER INC is currently lower than what is desirable, coming in at 32.55%. Regardless of WPG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, WPG's net profit margin of 5.75% is significantly lower than the industry average.
  • WPG'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 33.89%, 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.
  • WPG, with its decline in revenue, underperformed when compared the industry average of 11.9%. Since the same quarter one year prior, revenues fell by 12.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • WP GLIMCHER INC 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, WP GLIMCHER INC swung to a loss, reporting -$0.55 versus $1.10 in the prior year. This year, the market expects an improvement in earnings ($0.35 versus -$0.55).

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NextEra Energy Partners

Dividend Yield: 4.60%

NextEra Energy Partners

(NYSE:

NEP

) shares currently have a dividend yield of 4.60%.

NextEra Energy Partners, LP acquires, owns, and operates contracted clean energy projects. It owns interests in wind and solar projects in North America, as well as in seven contracted natural gas pipeline assets in Texas. The company has a P/E ratio of 127.27.

The average volume for NextEra Energy Partners has been 308,400 shares per day over the past 30 days. NextEra Energy Partners has a market cap of $1.2 billion and is part of the utilities industry. Shares are down 6.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

NextEra Energy Partners

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 2.79 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, NEP maintains a poor quick ratio of 0.88, which illustrates the inability to avoid short-term cash problems.
  • 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 Independent Power Producers & Energy Traders industry and the overall market, NEXTERA ENERGY PARTNERS LP'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.
  • NEP'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 35.14%, 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.
  • The gross profit margin for NEXTERA ENERGY PARTNERS LP is currently very high, coming in at 72.12%. Regardless of NEP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.03% trails the industry average.
  • Net operating cash flow has significantly increased by 226.66% to $49.00 million when compared to the same quarter last year. In addition, NEXTERA ENERGY PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -43.14%.

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