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: 12.30%

Plains GP Holdings

(NYSE:

PAGP

) shares currently have a dividend yield of 12.30%.

Plains GP Holdings, L.P., through its interest in Plains AAP, L.P., owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids, natural gas, and refined products in the United States and Canada. The company has a P/E ratio of 13.16.

The average volume for Plains GP Holdings has been 4,092,200 shares per day over the past 30 days. Plains GP Holdings has a market cap of $1.7 billion and is part of the energy industry. Shares are down 70.5% year-to-date as of the close of trading on Monday.

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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, 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 6.24 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 0.54, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • PAGP'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 68.08%, 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. 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 9.04%. 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 0.57% 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. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PLAINS GP HOLDINGS LP's return on equity is below that of both the industry average and the S&P 500.
  • Along with the very weak revenue results, PAGP underperformed when compared to the industry average of 36.9%. Since the same quarter one year prior, revenues plummeted by 50.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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Ensco

Dividend Yield: 4.20%

Ensco

(NYSE:

ESV

) shares currently have a dividend yield of 4.20%.

Ensco plc provides offshore contract drilling services to the oil and gas industry worldwide. The company operates through three segments: Floaters, Jackups, and Other.

The average volume for Ensco has been 6,436,200 shares per day over the past 30 days. Ensco has a market cap of $3.4 billion and is part of the energy industry. Shares are down 51.9% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Ensco

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its 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:

  • 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 Energy Equipment & Services industry and the overall market, ENSCO PLC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $375.10 million or 37.68% 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.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.87%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 25.13% 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.
  • ENSCO PLC's earnings per share declined by 25.1% 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, ENSCO PLC swung to a loss, reporting -$11.70 versus $6.08 in the prior year. This year, the market expects an improvement in earnings ($4.31 versus -$11.70).
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Energy Equipment & Services industry average, but is less than that of the S&P 500. The net income has significantly decreased by 32.0% when compared to the same quarter one year ago, falling from $429.40 million to $292.00 million.

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Bristow Group

Dividend Yield: 6.00%

Bristow Group

(NYSE:

BRS

) shares currently have a dividend yield of 6.00%.

Bristow Group Inc. provides helicopter services to the offshore energy industry in Africa, Americas, the Asia Pacific, and Europe Caspian.

The average volume for Bristow Group has been 771,600 shares per day over the past 30 days. Bristow Group has a market cap of $794.9 million and is part of the energy industry. Shares are down 64.1% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Bristow Group

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:

  • BRISTOW GROUP 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, BRISTOW GROUP INC reported lower earnings of $2.36 versus $5.09 in the prior year. For the next year, the market is expecting a contraction of 13.1% in earnings ($2.05 versus $2.36).
  • 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 Energy Equipment & Services industry. The net income has significantly decreased by 262.3% when compared to the same quarter one year ago, falling from $26.08 million to -$42.33 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 Energy Equipment & Services industry and the overall market on the basis of return on equity, BRISTOW GROUP INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for BRISTOW GROUP INC is currently lower than what is desirable, coming in at 25.86%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -9.47% is significantly below that of the industry average.
  • Net operating cash flow has decreased to $42.32 million or 33.68% 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.

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