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."

Gazit-Globe

Dividend Yield: 17.20%

Gazit-Globe

(NYSE:

GZT

) shares currently have a dividend yield of 17.20%.

Gazit-Globe Ltd., through its subsidiaries, acquires, owns, develops, operates, and redevelops supermarket-anchored shopping centers and retail properties in North America, Europe, Israel, and Brazil.

The average volume for Gazit-Globe has been 7,500 shares per day over the past 30 days. Gazit-Globe has a market cap of $1.4 billion and is part of the real estate industry. Shares are down 6.9% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Gazit-Globe

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, feeble growth in its earnings per share, deteriorating net income, generally high debt management risk and disappointing return on equity.

Highlights from the ratings report include:

  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, GZT has underperformed the S&P 500 Index, declining 21.19% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • GAZIT GLOBE's earnings per share declined by 16.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, GAZIT GLOBE reported lower earnings of $0.10 versus $1.51 in the prior year.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Real Estate Management & Development industry average, but is greater than that of the S&P 500. The net income has decreased by 12.1% when compared to the same quarter one year ago, dropping from $43.62 million to $38.34 million.
  • The debt-to-equity ratio is very high at 5.54 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.48, which clearly demonstrates the inability to cover short-term cash needs.
  • 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 Real Estate Management & Development industry and the overall market on the basis of return on equity, GAZIT GLOBE underperformed against that of the industry average and is significantly less than that of the S&P 500.

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City Office REIT

Dividend Yield: 8.90%

City Office REIT

(NYSE:

CIO

) shares currently have a dividend yield of 8.90%.

City Office REIT, Inc is an equity real estate investment trust. The fund invests in the real estate markets of the United States. It acquires, own and operate high-quality office properties. City Office REIT, Inc was formed in November 26, 2013 and is domiciled in the United States.

The average volume for City Office REIT has been 47,800 shares per day over the past 30 days. City Office REIT has a market cap of $131.3 million and is part of the real estate industry. Shares are down 18.6% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

City Office REIT

as a

sell

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

Highlights from the ratings report include:

  • The gross profit margin for CITY OFFICE REIT INC is currently extremely low, coming in at 1.75%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -15.44% is significantly below that of the industry average.
  • CIO has underperformed the S&P 500 Index, declining 13.77% 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.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Real Estate Investment Trusts (REITs) industry average, but is greater than that of the S&P 500. The net income increased by 17.7% when compared to the same quarter one year prior, going from -$2.18 million to -$1.80 million.
  • Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CITY OFFICE REIT INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 62.43% to $2.91 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 15.97%.

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Ecopetrol

Dividend Yield: 11.30%

Ecopetrol

(NYSE:

EC

) shares currently have a dividend yield of 11.30%.

Ecopetrol S.A., an integrated oil company, engages in the exploration, development, and production of crude oil and natural gas primarily in Colombia, Peru, Brazil, Angola, and the United States Gulf Coast. The company has a P/E ratio of 1566.00.

The average volume for Ecopetrol has been 874,500 shares per day over the past 30 days. Ecopetrol has a market cap of $19.0 billion and is part of the energy industry. Shares are down 44.8% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Ecopetrol

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 72.11%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 61.84% compared to the year-earlier 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.
  • ECOPETROL SA 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, ECOPETROL SA reported lower earnings of $1.55 versus $3.31 in the prior year. For the next year, the market is expecting a contraction of 71.6% in earnings ($0.44 versus $1.55).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 62.4% when compared to the same quarter one year ago, falling from $1,559.52 million to $586.46 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, ECOPETROL SA's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $142.19 million or 91.89% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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