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: 13.00%

KNOT Offshore Partners

(NYSE:

KNOP

) shares currently have a dividend yield of 13.00%.

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 15.15.

The average volume for KNOT Offshore Partners has been 90,300 shares per day over the past 30 days. KNOT Offshore Partners has a market cap of $221.7 million and is part of the transportation industry. Shares are down 27.8% year-to-date as of the close of trading on Friday.

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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, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The debt-to-equity ratio of 1.17 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • 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. 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.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 27.83%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 43.85% 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.
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 29.9% when compared to the same quarter one year ago, falling from $12.56 million to $8.80 million.
  • KNOT OFFSHORE PRTNRS LP's earnings per share declined by 43.9% 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, KNOT OFFSHORE PRTNRS LP increased its bottom line by earning $1.34 versus $0.87 in the prior year. This year, the market expects an improvement in earnings ($1.35 versus $1.34).

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Student Transportation

Dividend Yield: 10.70%

Student Transportation

(NASDAQ:

STB

) shares currently have a dividend yield of 10.70%.

Student Transportation Inc., together with its subsidiaries, provides student transportation solutions in North America. The company offers contracted, managed, special needs transportation, direct-to-parent, and charter services. The company has a P/E ratio of 82.40.

The average volume for Student Transportation has been 103,200 shares per day over the past 30 days. Student Transportation has a market cap of $397.6 million and is part of the transportation industry. Shares are down 33.9% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Student Transportation

as a

sell

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

Highlights from the ratings report include:

  • STB'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 35.83%, 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. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, STB is still more expensive than most of the other companies in its industry.
  • The gross profit margin for STUDENT TRANSPORTATION INC is currently extremely low, coming in at 8.03%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -10.21% is significantly below that of the industry average.
  • Currently the debt-to-equity ratio of 1.55 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, STB's quick ratio is somewhat strong at 1.27, demonstrating the ability to handle short-term liquidity needs.
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Road & Rail industry average. The net income has decreased by 9.0% when compared to the same quarter one year ago, dropping from -$8.76 million to -$9.54 million.
  • 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 Road & Rail industry and the overall market, STUDENT TRANSPORTATION INC's return on equity significantly trails that of both the industry average and the S&P 500.

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OHA Investment

Dividend Yield: 11.40%

OHA Investment

(NASDAQ:

OHAI

) shares currently have a dividend yield of 11.40%.

OHA Investment Corporation is a business development company specializing in investments in small and mid size and middle market private companies. The company has a P/E ratio of 11.67.

The average volume for OHA Investment has been 53,700 shares per day over the past 30 days. OHA Investment has a market cap of $84.7 million and is part of the financial services industry. Shares are down 10.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

OHA Investment

as a

sell

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

Highlights from the ratings report include:

  • OHA INVESTMENT CORP's earnings per share declined by 10.0% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, OHA INVESTMENT CORP swung to a loss, reporting -$1.08 versus $0.19 in the prior year.
  • 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 Capital Markets industry and the overall market, OHA INVESTMENT CORP'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 -$20.23 million or 189.41% 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 OHAI's shares over the past 12 months, there is not much good news to report: the stock is down 33.23%, 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. 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 change in net income from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Capital Markets industry average. The net income has decreased by 9.3% when compared to the same quarter one year ago, dropping from -$6.08 million to -$6.65 million.

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