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."

KNOT Offshore Partners

Dividend Yield: 12.40%

KNOT Offshore Partners

(NYSE:

KNOP

) shares currently have a dividend yield of 12.40%.

KNOT Offshore Partners LP owns and operates shuttle tankers under long-term charters in the North Sea and Brazil. The company provides crude oil loading, transportation, and storage services under time charters and bareboat charters. The company has a P/E ratio of 15.83.

The average volume for KNOT Offshore Partners has been 105,500 shares per day over the past 30 days. KNOT Offshore Partners has a market cap of $231.7 million and is part of the transportation industry. Shares are down 23.3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

KNOT Offshore Partners

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The debt-to-equity ratio of 1.18 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • KNOP'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 26.50%, 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. 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.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, KNOT OFFSHORE PRTNRS LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The gross profit margin for KNOT OFFSHORE PRTNRS LP is currently very high, coming in at 80.63%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.62% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 67.58% to $22.00 million when compared to the same quarter last year. In addition, KNOT OFFSHORE PRTNRS LP has also vastly surpassed the industry average cash flow growth rate of -19.46%.

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Anworth Mortgage Asset

Dividend Yield: 12.40%

Anworth Mortgage Asset

(NYSE:

ANH

) shares currently have a dividend yield of 12.40%.

Anworth Mortgage Asset Corporation operates as a real estate investment trust in the United States. The company has a P/E ratio of 242.50.

The average volume for Anworth Mortgage Asset has been 924,100 shares per day over the past 30 days. Anworth Mortgage Asset has a market cap of $497.8 million and is part of the real estate industry. Shares are down 6.9% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Anworth Mortgage Asset

as a

sell

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

Highlights from the ratings report include:

  • In its most recent trading session, ANH has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • 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 Investment Trusts (REITs) industry and the overall market, ANWORTH MTG ASSET CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • ANH, with its decline in revenue, underperformed when compared the industry average of 9.8%. Since the same quarter one year prior, revenues fell by 17.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • ANWORTH MTG ASSET CORP reported significant earnings per share improvement 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, ANWORTH MTG ASSET CORP reported lower earnings of $0.18 versus $0.49 in the prior year. This year, the market expects an improvement in earnings ($0.28 versus $0.18).
  • The gross profit margin for ANWORTH MTG ASSET CORP is currently very high, coming in at 90.15%. Regardless of ANH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ANH's net profit margin of 56.17% significantly outperformed against the industry.

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Acacia Research Corporation

Dividend Yield: 7.10%

Acacia Research Corporation

(NASDAQ:

ACTG

) shares currently have a dividend yield of 7.10%.

Acacia Research Corporation, through its subsidiaries, invests in, develops, licenses, and enforces patented technologies in the United States.

The average volume for Acacia Research Corporation has been 493,200 shares per day over the past 30 days. Acacia Research Corporation has a market cap of $356.2 million and is part of the diversified services industry. Shares are down 58.9% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Acacia Research Corporation

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow, 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 Professional Services industry. The net income has significantly decreased by 120.0% when compared to the same quarter one year ago, falling from -$12.42 million to -$27.31 million.
  • Net operating cash flow has decreased to $8.60 million or 40.80% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 57.22%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 111.53% 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.
  • ACACIA RESEARCH CORP 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, ACACIA RESEARCH CORP reported poor results of -$1.38 versus -$1.18 in the prior year. This year, the market expects an improvement in earnings ($0.37 versus -$1.38).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Professional Services industry and the overall market, ACACIA RESEARCH CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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