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."

Independence Realty

Dividend Yield: 9.20%

Independence Realty

(AMEX:

IRT

) shares currently have a dividend yield of 9.20%.

Independence Realty Trust, Inc is an equity real estate investment trust launched by RAIT Financial Trust. It is managed by Independence Realty Advisors, LLC. The fund invests in the real estate markets of the United States. It makes investments in apartment properties to create its portfolio. The company has a P/E ratio of 10.57.

The average volume for Independence Realty has been 199,400 shares per day over the past 30 days. Independence Realty has a market cap of $369.0 million and is part of the real estate industry. Shares are down 16.1% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Independence Realty

as a

sell

. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

Highlights from the ratings report include:

  • Net operating cash flow has significantly decreased to -$8.35 million or 280.98% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, INDEPENDENCE REALTY TRUST's return on equity is below that of both the industry average and the S&P 500.
  • This stock's share value has moved by only 18.52% over the past year. 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 gross profit margin for INDEPENDENCE REALTY TRUST is currently lower than what is desirable, coming in at 29.80%. Regardless of IRT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, IRT's net profit margin of 94.13% significantly outperformed against the industry.

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Avianca Holdings

Dividend Yield: 12.60%

Avianca Holdings

(NYSE:

AVH

) shares currently have a dividend yield of 12.60%.

Avianca Holdings S.A., through its subsidiaries, provides air transportation services in North America, Central America, the Caribbean, Colombia, South America, and internationally.

The average volume for Avianca Holdings has been 351,600 shares per day over the past 30 days. Avianca Holdings has a market cap of $534.6 million and is part of the transportation industry. Shares are down 62.1% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Avianca Holdings

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk, poor profit margins, weak operating cash flow 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 compared to the Airlines industry average, but is greater than that of the S&P 500. The net income has decreased by 7.6% when compared to the same quarter one year ago, dropping from -$21.37 million to -$23.00 million.
  • The debt-to-equity ratio is very high at 2.57 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, AVH has a quick ratio of 0.63, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • The gross profit margin for AVIANCA HOLDINGS SA is rather low; currently it is at 23.84%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.16% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $95.88 million or 51.79% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Looking at the price performance of AVH's shares over the past 12 months, there is not much good news to report: the stock is down 66.37%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier 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.

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BDCA Venture

Dividend Yield: 14.30%

BDCA Venture

(NASDAQ:

BDCV

) shares currently have a dividend yield of 14.30%.

BDC Venture, Inc. is a business development company specializing in later stage, emerging growth, growth capital, secured and unsecured debt, pre-IPO and secondary purchase investments.

The average volume for BDCA Venture has been 15,500 shares per day over the past 30 days. BDCA Venture has a market cap of $40.8 million and is part of the financial services industry. Shares are down 14.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

BDCA Venture

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, unimpressive growth in 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:

  • BDCA VENTURE 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 suffered a declining pattern earnings per share over the past two years. During the past fiscal year, BDCA VENTURE INC swung to a loss, reporting -$0.09 versus $0.26 in the prior year.
  • 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 Capital Markets industry. The net income has significantly decreased by 63.7% when compared to the same quarter one year ago, falling from -$3.06 million to -$5.00 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. Compared to other companies in the Capital Markets industry and the overall market, BDCA VENTURE INC'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 -$1.01 million or 140.60% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The share price of BDCA VENTURE INC has not done very well: it is down 24.51% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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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