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."

Fly Leasing

Dividend Yield: 7.20%

Fly Leasing

(NYSE:

FLY

) shares currently have a dividend yield of 7.20%.

FLY Leasing Limited, together with its subsidiaries, engages in purchasing and leasing commercial aircraft under multi-year contracts to various airlines worldwide.

The average volume for Fly Leasing has been 363,600 shares per day over the past 30 days. Fly Leasing has a market cap of $574.0 million and is part of the diversified services industry. Shares are up 3.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Fly Leasing

as a

sell

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

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 3.99 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Trading Companies & Distributors industry and the overall market, FLY LEASING LTD -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • FLY, with its decline in revenue, slightly underperformed the industry average of 2.5%. Since the same quarter one year prior, revenues slightly dropped by 6.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • After a year of stock price fluctuations, the net result is that FLY's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • FLY LEASING LTD -ADR has improved earnings per share by 27.0% 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, FLY LEASING LTD -ADR reported lower earnings of $1.32 versus $1.67 in the prior year. This year, the market expects an improvement in earnings ($2.23 versus $1.32).

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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 25,100 shares per day over the past 30 days. Arc Logistics Partners has a market cap of $165.9 million and is part of the energy industry. Shares are down 29.5% year-to-date as of the close of trading on Wednesday.

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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 disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • 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 underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • 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 32.86%, 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.
  • 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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Global Ship Lease

Dividend Yield: 7.80%

Global Ship Lease

(NYSE:

GSL

) shares currently have a dividend yield of 7.80%.

Global Ship Lease, Inc. owns and charters containerships of various sizes under long-term fixed-rate charters to container shipping companies. As of April 21, 2015, it owned 19 vessels with a total capacity of 82,475 twenty-foot equivalent units. The company has a P/E ratio of 3.75.

The average volume for Global Ship Lease has been 105,100 shares per day over the past 30 days. Global Ship Lease has a market cap of $121.2 million and is part of the transportation industry. Shares are down 44.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Global Ship Lease

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally high debt management risk, 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 Marine industry. The net income has significantly decreased by 700.1% when compared to the same quarter one year ago, falling from $6.72 million to -$40.32 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 Marine industry and the overall market, GLOBAL SHIP LEASE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio of 1.24 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, GSL has managed to keep a strong quick ratio of 1.58, which demonstrates the ability to cover short-term cash needs.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 35.82%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 761.53% 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.
  • GLOBAL SHIP LEASE 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, GLOBAL SHIP LEASE INC reported lower earnings of $0.10 versus $0.68 in the prior year. This year, the market expects an improvement in earnings ($0.22 versus $0.10).

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