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."

JP Energy Partners

Dividend Yield: 19.40%

JP Energy Partners

(NYSE:

JPEP

) shares currently have a dividend yield of 19.40%.

JP Energy Partners LP owns, operates, develops, and acquires a portfolio of midstream energy assets in the United States. It operates through four segments: Crude Oil Pipelines and Storage; Crude Oil Supply and Logistics; Refined Products Terminals and Storage; and NGL Distribution and Sales.

The average volume for JP Energy Partners has been 48,800 shares per day over the past 30 days. JP Energy Partners has a market cap of $123.5 million and is part of the energy industry. Shares are down 44.1% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

JP Energy Partners

as a

sell

. Among the areas we feel are negative, one of the most important has been poor profit margins.

Highlights from the ratings report include:

  • The gross profit margin for JP ENERGY PARTNERS LP is currently extremely low, coming in at 6.07%. Regardless of JPEP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.44% trails the industry average.
  • Despite the weak revenue results, JPEP has outperformed against the industry average of 36.8%. Since the same quarter one year prior, revenues fell by 23.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • JPEP's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.88 is somewhat weak and could be cause for future problems.
  • Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, JP ENERGY PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • JPEP'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 61.09%, 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.

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Legacy Reserves

Dividend Yield: 17.20%

Legacy Reserves

(NASDAQ:

LGCY

) shares currently have a dividend yield of 17.20%.

Legacy Reserves LP owns and operates oil and natural gas properties in the United States.

The average volume for Legacy Reserves has been 394,300 shares per day over the past 30 days. Legacy Reserves has a market cap of $241.9 million and is part of the energy industry. Shares are down 72.1% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Legacy Reserves

as a

sell

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

Highlights from the ratings report include:

  • LEGACY RESERVES LP 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, LEGACY RESERVES LP reported poor results of -$4.24 versus -$0.62 in the prior year. For the next year, the market is expecting a contraction of 29.7% in earnings (-$5.50 versus -$4.24).
  • 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 241.2% when compared to the same quarter one year ago, falling from $63.82 million to -$90.08 million.
  • The debt-to-equity ratio is very high at 8.16 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, LGCY maintains a poor quick ratio of 0.83, which illustrates the inability to avoid short-term cash problems.
  • 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, LEGACY RESERVES LP's return on equity significantly trails 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 81.98%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 235.29% 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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Natural Resources Partners

Dividend Yield: 12.20%

Natural Resources Partners

(NYSE:

NRP

) shares currently have a dividend yield of 12.20%.

Natural Resource Partners L.P., through its subsidiaries, owns, manages, and leases mineral properties in the United States.

The average volume for Natural Resources Partners has been 460,300 shares per day over the past 30 days. Natural Resources Partners has a market cap of $181.0 million and is part of the metals & mining industry. Shares are down 83.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Natural Resources Partners

as a

sell

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

Highlights from the ratings report include:

  • NATURAL RESOURCE PARTNERS LP 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, NATURAL RESOURCE PARTNERS LP reported lower earnings of $0.96 versus $1.54 in the prior year. For the next year, the market is expecting a contraction of 21.9% in earnings ($0.75 versus $0.96).
  • 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 1755.3% when compared to the same quarter one year ago, falling from $36.17 million to -$598.76 million.
  • The debt-to-equity ratio is very high at 13.75 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, NRP maintains a poor quick ratio of 0.82, which illustrates the inability to avoid short-term cash problems.
  • 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, NATURAL RESOURCE PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $55.24 million or 3.86% when compared to the same quarter last year. Despite a decrease in cash flow NATURAL RESOURCE PARTNERS LP is still fairing well by exceeding its industry average cash flow growth rate of -25.83%.

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