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."

Capitala Finance

Dividend Yield: 16.70%

Capitala Finance

(NASDAQ:

CPTA

) shares currently have a dividend yield of 16.70%.

Capitala Finance Corp. is a Business Development Company specializing in investments in traditional mezzanine, senior subordinated and unitranche debt, second-lien loans, equity securities issued by lower and traditional middle-market companies, and small and middle-market companies. The company has a P/E ratio of 62.44.

The average volume for Capitala Finance has been 109,000 shares per day over the past 30 days. Capitala Finance has a market cap of $177.2 million and is part of the financial services industry. Shares are down 4.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Capitala Finance

as a

sell

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

Highlights from the ratings report include:

  • CPTA'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 43.92%, 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. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • 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 Capital Markets industry and the overall market, CAPITALA FINANCE CORP's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to -$29.14 million or 44.66% when compared to the same quarter last year. Despite an increase in cash flow, CAPITALA FINANCE CORP's cash flow growth rate is still lower than the industry average growth rate of 88.31%.
  • CAPITALA FINANCE 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, CAPITALA FINANCE CORP swung to a loss, reporting -$0.27 versus $1.13 in the prior year. This year, the market expects an improvement in earnings ($1.65 versus -$0.27).

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Arc Logistics Partners

Dividend Yield: 14.00%

Arc Logistics Partners

(NYSE:

ARCX

) shares currently have a dividend yield of 14.00%.

Arc Logistics Partners LP engages in the terminalling, storage, throughput, and transloading of crude oil and petroleum products.

The average volume for Arc Logistics Partners has been 31,700 shares per day over the past 30 days. Arc Logistics Partners has a market cap of $242.4 million and is part of the energy industry. Shares are down 4.8% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Arc Logistics Partners

as a

sell

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

Highlights from the ratings report include:

  • ARCX'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 35.84%, 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 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 Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, ARC LOGISTICS PARTNERS LP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • ARCX's debt-to-equity ratio of 0.73 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.08 is sturdy.
  • ARC LOGISTICS PARTNERS LP has improved earnings per share by 9.1% 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, ARC LOGISTICS PARTNERS LP reported lower earnings of $0.06 versus $0.13 in the prior year. This year, the market expects an improvement in earnings ($0.43 versus $0.06).
  • 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 22.2% when compared to the same quarter one year prior, going from $1.64 million to $2.00 million.

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Ladder Capital

Dividend Yield: 10.30%

Ladder Capital

(NYSE:

LADR

) shares currently have a dividend yield of 10.30%.

Ladder Capital Corp operates as a real estate investment trust in the United States. The company operates through three segments: Loans, Securities, and Real Estate. The company has a P/E ratio of 10.33.

The average volume for Ladder Capital has been 267,100 shares per day over the past 30 days. Ladder Capital has a market cap of $1.1 billion and is part of the real estate industry. Shares are down 12.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Ladder Capital

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 77.4% when compared to the same quarter one year ago, falling from $14.66 million to $3.31 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, LADDER CAPITAL CORP's return on equity is below 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 41.75%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 78.57% 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.
  • LADDER CAPITAL 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. 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, LADDER CAPITAL CORP increased its bottom line by earning $0.80 versus $0.44 in the prior year. This year, the market expects an improvement in earnings ($1.85 versus $0.80).
  • The gross profit margin for LADDER CAPITAL CORP is currently very high, coming in at 70.70%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, LADR's net profit margin of 2.95% significantly trails the industry average.

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