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: 7.60%

Fly Leasing

(NYSE:

FLY

) shares currently have a dividend yield of 7.60%.

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 352,700 shares per day over the past 30 days. Fly Leasing has a market cap of $543.5 million and is part of the diversified services industry. Shares are down 2% year-to-date as of the close of trading on Friday.

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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 2.7%. 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 ($2.05 versus $1.32).

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Westmoreland Resource Partners

Dividend Yield: 15.50%

Westmoreland Resource Partners

(NYSE:

WMLP

) shares currently have a dividend yield of 15.50%.

Westmoreland Resource Partners, LP produces and markets thermal coal in the United States. It also produces surface mined coal in Ohio. As of December 31, 2014, the company managed 13 active surface mines and managed these mines as 6 mining complexes located in eastern Ohio.

The average volume for Westmoreland Resource Partners has been 3,300 shares per day over the past 30 days. Westmoreland Resource Partners has a market cap of $29.4 million and is part of the metals & mining industry. Shares are up 10445.5% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Westmoreland Resource Partners

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, weak operating cash flow, poor profit margins 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 230.0% when compared to the same quarter one year ago, falling from $9.79 million to -$12.72 million.
  • The debt-to-equity ratio is very high at 11.60 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, WMLP maintains a poor quick ratio of 0.73, which illustrates the inability to avoid short-term cash problems.
  • Net operating cash flow has decreased to $14.46 million or 43.42% 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.
  • The gross profit margin for WESTMORELAND RES PARTNERS LP is rather low; currently it is at 18.81%. Regardless of WMLP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, WMLP's net profit margin of -13.48% significantly underperformed when compared to the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 41.08%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 157.69% 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.

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Enable Midstream Partners

Dividend Yield: 19.10%

Enable Midstream Partners

(NYSE:

ENBL

) shares currently have a dividend yield of 19.10%.

Enable Midstream Partners, LP owns, operates, and develops natural gas and crude oil infrastructure assets in the United States. It operates through two segments, Gathering and Processing, and Transportation and Storage.

The average volume for Enable Midstream Partners has been 225,300 shares per day over the past 30 days. Enable Midstream Partners has a market cap of $1.4 billion and is part of the energy industry. Shares are down 66% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Enable Midstream Partners

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally high debt management risk.

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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 808.6% when compared to the same quarter one year ago, falling from $139.00 million to -$985.00 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, ENABLE MIDSTREAM PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ENABLE MIDSTREAM PARTNERS LP is currently lower than what is desirable, coming in at 33.13%. Regardless of ENBL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, ENBL's net profit margin of -152.47% significantly underperformed when compared to the industry average.
  • Net operating cash flow has decreased to $207.00 million or 23.04% when compared to the same quarter last year. Despite a decrease in cash flow of 23.04%, ENABLE MIDSTREAM PARTNERS LP is in line with the industry average cash flow growth rate of -26.70%.
  • Despite currently having a low debt-to-equity ratio of 0.42, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.40 is very low and demonstrates very weak liquidity.

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