Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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."

AG Mortgage Investment

Dividend Yield: 13.50%

AG Mortgage Investment

(NYSE:

MITT

) shares currently have a dividend yield of 13.50%.

AG Mortgage Investment Trust, Inc., a real estate investment trust, focuses on investing, acquiring, and managing a portfolio of residential mortgage assets, and other real estate-related securities and financial assets.

The average volume for AG Mortgage Investment has been 254,200 shares per day over the past 30 days. AG Mortgage Investment has a market cap of $505.5 million and is part of the real estate industry. Shares are up 13.8% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates

AG Mortgage Investment

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, 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 against the S&P 500 and did not exceed that of the Real Estate Investment Trusts (REITs) industry. The net income has decreased by 5.4% when compared to the same quarter one year ago, dropping from $17.85 million to $16.89 million.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, AG MORTGAGE INVESTMENT TRUST'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 $25.77 million or 50.81% 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 MITT's shares over the past 12 months, there is not much good news to report: the stock is down 30.68%, 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.
  • AG MORTGAGE INVESTMENT TRUST's earnings per share declined by 22.6% 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. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, AG MORTGAGE INVESTMENT TRUST swung to a loss, reporting -$1.60 versus $7.34 in the prior year. This year, the market expects an improvement in earnings ($2.22 versus -$1.60).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Southcross Energy Partners

Dividend Yield: 9.40%

Southcross Energy Partners

(NYSE:

SXE

) shares currently have a dividend yield of 9.40%.

Southcross Energy Partners, L.P., together with its subsidiaries, provides natural gas gathering, processing, treating, compression, and transportation services in the United States. It also offers natural gas liquid (NGL) fractionation and transportation services.

The average volume for Southcross Energy Partners has been 181,500 shares per day over the past 30 days. Southcross Energy Partners has a market cap of $366.0 million and is part of the utilities industry. Shares are down 4.3% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates

Southcross Energy Partners

TheStreet Recommends

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 poor profit margins.

Highlights from the ratings report include:

  • SXE has underperformed the S&P 500 Index, declining 14.90% from its price level of one year ago. 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 SOUTHCROSS ENERGY PRTNRS LP is currently extremely low, coming in at 7.47%. Regardless of SXE'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 0.38% trails the industry average.
  • SXE's debt-to-equity ratio of 0.85 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.90 is weak.
  • Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SOUTHCROSS ENERGY PRTNRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $12.51 million or 35.09% when compared to the same quarter last year. In addition, SOUTHCROSS ENERGY PRTNRS LP has also vastly surpassed the industry average cash flow growth rate of -22.97%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Deswell Industries

Dividend Yield: 9.40%

Deswell Industries

(NASDAQ:

DSWL

) shares currently have a dividend yield of 9.40%.

Deswell Industries, Inc. engages in the manufacture and sale of injection-molded plastic parts and components, electronic products and subassemblies, and metallic molds and accessory parts for original equipment manufacturers and contract manufacturers.

The average volume for Deswell Industries has been 27,100 shares per day over the past 30 days. Deswell Industries has a market cap of $34.4 million and is part of the consumer non-durables industry. Shares are down 6.2% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates

Deswell Industries

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, disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:

  • DESWELL INDUSTRIES 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, DESWELL INDUSTRIES INC reported poor results of -$0.12 versus -$0.09 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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 543.0% when compared to the same quarter one year ago, falling from -$0.22 million to -$1.42 million.
  • 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 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.
  • The gross profit margin for DESWELL INDUSTRIES INC is rather low; currently it is at 18.76%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -13.25% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$0.22 million or 103.83% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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