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."

Plains GP Holdings

Dividend Yield: 11.40%

Plains GP Holdings

(NYSE:

PAGP

) shares currently have a dividend yield of 11.40%.

Plains GP Holdings, L.P. together with its subsidiaries, owns and operates midstream energy infrastructure in the United States and Canada. It operates through three segments: Transportation, Facilities, and Supply and Logistics. The company has a P/E ratio of 16.83.

The average volume for Plains GP Holdings has been 4,640,500 shares per day over the past 30 days. Plains GP Holdings has a market cap of $5.0 billion and is part of the energy industry. Shares are down 14% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Plains GP Holdings

as a

sell

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

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 6.77 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, PAGP has a quick ratio of 0.53, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly decreased to $120.00 million or 83.37% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • Looking at the price performance of PAGP's shares over the past 12 months, there is not much good news to report: the stock is down 70.94%, 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The gross profit margin for PLAINS GP HOLDINGS LP is currently extremely low, coming in at 10.37%. Regardless of PAGP'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 0.50% trails the industry average.
  • PAGP, with its decline in revenue, underperformed when compared the industry average of 34.7%. Since the same quarter one year prior, revenues fell by 47.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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Enbridge

Dividend Yield: 4.10%

Enbridge

(NYSE:

ENB

) shares currently have a dividend yield of 4.10%.

Enbridge Inc. operates as an energy transportation and distribution company in the United States and Canada. Its Liquids Pipelines segment operates common carrier and contract crude oil, natural gas liquids (NGL), and refined products pipelines and terminals. The company has a P/E ratio of 39.44.

The average volume for Enbridge has been 1,811,800 shares per day over the past 30 days. Enbridge has a market cap of $32.5 billion and is part of the energy industry. Shares are up 12.9% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Enbridge

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

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 2.25 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.44, which clearly demonstrates the inability to cover short-term cash needs.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, ENBRIDGE INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • ENB has underperformed the S&P 500 Index, declining 23.04% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The gross profit margin for ENBRIDGE INC is rather low; currently it is at 15.01%. Regardless of ENB's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, ENB's net profit margin of 5.07% compares favorably to the industry average.
  • ENBRIDGE INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, ENBRIDGE INC swung to a loss, reporting -$0.07 versus $1.32 in the prior year.

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ING Groep

Dividend Yield: 7.50%

ING Groep

(NYSE:

ING

) shares currently have a dividend yield of 7.50%.

ING Groep N.V., a financial institution, provides various banking products and services to individuals, small and medium-sized enterprises, and mid-corporates. It operates through Retail Netherlands, Retail Belgium, Retail Germany, Retail Other, and Wholesale Banking segments. The company has a P/E ratio of 8.70.

The average volume for ING Groep has been 3,361,400 shares per day over the past 30 days. ING Groep has a market cap of $47.1 billion and is part of the banking industry. Shares are down 9.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

ING Groep

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, unimpressive growth in net income and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, ING has underperformed the S&P 500 Index, declining 17.88% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
  • 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 Commercial Banks industry average. The net income has decreased by 5.5% when compared to the same quarter one year ago, dropping from $1,259.73 million to $1,190.14 million.
  • ING GROEP NV's earnings per share declined by 9.4% 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, ING GROEP NV reported lower earnings of $0.58 versus $0.91 in the prior year. This year, the market expects an improvement in earnings ($1.41 versus $0.58).
  • 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 Commercial Banks industry and the overall market, ING GROEP NV's return on equity is below that of both the industry average and the S&P 500.
  • 39.14% is the gross profit margin for ING GROEP NV which we consider to be strong. Regardless of ING's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ING's net profit margin of 27.50% significantly outperformed against the industry.

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