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."

Overseas Shipholding Group

Dividend Yield: 13.30%

Overseas Shipholding Group

(AMEX:

OSGB

) shares currently have a dividend yield of 13.30%.

Overseas Shipholding Group, Inc. primarily engages in the ocean transportation of crude oil and petroleum products. The company has a P/E ratio of 4.84.

The average volume for Overseas Shipholding Group has been 49,200 shares per day over the past 30 days. Overseas Shipholding Group has a market cap of $893.5 million and is part of the transportation industry. Shares are down 32.3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Overseas Shipholding Group

as a

sell

. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • OSGB'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 37.47%, 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.
  • OSGB's debt-to-equity ratio of 1.00 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. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 5.31 is very high and demonstrates very strong liquidity.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, OVERSEAS SHIPHOLDING GROUP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • The gross profit margin for OVERSEAS SHIPHOLDING GROUP is rather high; currently it is at 54.25%. It has increased significantly from the same period last year. Along with this, the net profit margin of 71.70% significantly outperformed against the industry average.

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Tronox

Dividend Yield: 16.00%

Tronox

(NYSE:

TROX

) shares currently have a dividend yield of 16.00%.

Tronox Limited produces and markets titanium bearing mineral sands and titanium dioxide (TiO2) pigment in North America, Europe, South Africa, and the Asia-Pacific region. It primarily operates in two segments, TiO2 and Alkali. The company has a P/E ratio of 2.10.

The average volume for Tronox has been 1,250,300 shares per day over the past 30 days. Tronox has a market cap of $722.3 million and is part of the chemicals industry. Shares are up 47.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

TheStreet Recommends

Tronox

as a

sell

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

Highlights from the ratings report include:

  • 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 Chemicals industry and the overall market, TRONOX LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for TRONOX LTD is currently extremely low, coming in at 4.11%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -16.82% is significantly below that of the industry average.
  • The debt-to-equity ratio is very high at 3.13 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, TROX's quick ratio is somewhat strong at 1.14, demonstrating the ability to handle short-term liquidity needs.
  • TROX'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 71.25%, 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.
  • TRONOX LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, TRONOX LTD continued to lose money by earning -$2.75 versus -$3.73 in the prior year. This year, the market expects an improvement in earnings (-$0.95 versus -$2.75).

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Deswell Industries

Dividend Yield: 8.20%

Deswell Industries

(NASDAQ:

DSWL

) shares currently have a dividend yield of 8.20%.

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 37,900 shares per day over the past 30 days. Deswell Industries has a market cap of $27.3 million and is part of the consumer non-durables industry. Shares are up 20.5% year-to-date as of the close of trading on Wednesday.

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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 generally disappointing historical performance in the stock itself and poor profit margins.

Highlights from the ratings report include:

  • DSWL has underperformed the S&P 500 Index, declining 10.48% 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 DESWELL INDUSTRIES INC is rather low; currently it is at 16.06%. Regardless of DSWL'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 -2.43% trails the industry average.
  • 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.
  • DESWELL INDUSTRIES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, DESWELL INDUSTRIES INC continued to lose money by earning -$0.14 versus -$0.47 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 73.1% when compared to the same quarter one year prior, rising from -$1.13 million to -$0.31 million.

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