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: 12.90%

KNOT Offshore Partners

(NYSE:

KNOP

) shares currently have a dividend yield of 12.90%.

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 15.22.

The average volume for KNOT Offshore Partners has been 97,700 shares per day over the past 30 days. KNOT Offshore Partners has a market cap of $222.7 million and is part of the transportation industry. Shares are down 28% year-to-date as of the close of trading on Monday.

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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 28.09%, 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. 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. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, KNOT OFFSHORE PRTNRS LP's return on equity is below that of both the industry average and 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 -27.14%.

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Navios Maritime Holdings

Dividend Yield: 13.30%

Navios Maritime Holdings

(NYSE:

NM

) shares currently have a dividend yield of 13.30%.

Navios Maritime Holdings Inc. operates as a seaborne shipping and logistics company. It focuses on the transportation and transshipment of dry bulk commodities, including iron ore, coal, and grains. It operates in two segments, Dry bulk Vessel Operations and Logistics Business.

The average volume for Navios Maritime Holdings has been 687,100 shares per day over the past 30 days. Navios Maritime Holdings has a market cap of $195.2 million and is part of the transportation industry. Shares are down 56.2% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

TheStreet Recommends

Navios Maritime Holdings

as a

sell

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

Highlights from the ratings report include:

  • The gross profit margin for NAVIOS MARITIME HOLDINGS INC is rather low; currently it is at 21.89%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -20.70% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $2.10 million or 80.85% when compared to the same quarter last year. Despite a decrease in cash flow NAVIOS MARITIME HOLDINGS INC is still fairing well by exceeding its industry average cash flow growth rate of -91.35%.
  • NM'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 68.80%, 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 debt-to-equity ratio of 1.48 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, NM has managed to keep a strong quick ratio of 1.54, which demonstrates the ability to cover short-term cash needs.
  • 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 Marine industry and the overall market, NAVIOS MARITIME HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.

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Deswell Industries

Dividend Yield: 10.10%

Deswell Industries

(NASDAQ:

DSWL

) shares currently have a dividend yield of 10.10%.

Deswell Industries, Inc. manufactures and sells injection-molded plastic parts and components; and assembles electronic products for original equipment manufacturers and contract manufacturers.

The average volume for Deswell Industries has been 14,500 shares per day over the past 30 days. Deswell Industries has a market cap of $22.3 million and is part of the consumer non-durables industry. Shares are down 22.8% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Deswell Industries

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins and weak operating cash flow.

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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 7935.7% when compared to the same quarter one year ago, falling from $0.01 million to -$1.10 million.
  • The gross profit margin for DESWELL INDUSTRIES INC is currently extremely low, coming in at 12.22%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -9.73% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$2.30 million or 125.34% 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 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 Electronic Equipment, Instruments & Components industry and the overall market, DESWELL INDUSTRIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • This stock's share value has moved by only 34.47% over the past year. 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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