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."

PennyMac Mortgage Investment

Dividend Yield: 14.10%

PennyMac Mortgage Investment

(NYSE:

PMT

) shares currently have a dividend yield of 14.10%.

PennyMac Mortgage Investment Trust, a specialty finance company, invests primarily in residential mortgage loans and mortgage-related assets in the United States. The company operates in two segments, Correspondent Production and Investment Activities. The company has a P/E ratio of 11.49.

The average volume for PennyMac Mortgage Investment has been 864,100 shares per day over the past 30 days. PennyMac Mortgage Investment has a market cap of $963.1 million and is part of the real estate industry. Shares are down 12.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

PennyMac 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 when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 40.7% when compared to the same quarter one year ago, falling from $26.51 million to $15.71 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, PENNYMAC MORTGAGE INVEST TR's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$336.99 million or 2041.16% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much 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 38.13%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 38.23% 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.
  • PENNYMAC MORTGAGE INVEST TR's earnings per share declined by 38.2% 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, PENNYMAC MORTGAGE INVEST TR reported lower earnings of $1.15 versus $2.46 in the prior year. This year, the market expects an improvement in earnings ($1.72 versus $1.15).

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American Capital Agency

Dividend Yield: 12.90%

American Capital Agency

(NASDAQ:

AGNC

) shares currently have a dividend yield of 12.90%.

American Capital Agency Corp. operates as a real estate investment trust (REIT) in the United States. The company has a P/E ratio of 34.56.

The average volume for American Capital Agency has been 3,407,700 shares per day over the past 30 days. American Capital Agency has a market cap of $6.3 billion and is part of the real estate industry. Shares are up 5.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

American Capital Agency

as a

sell

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

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 when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 206.3% when compared to the same quarter one year ago, falling from -$252.00 million to -$772.00 million.
  • 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, AMERICAN CAPITAL AGENCY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of AMERICAN CAPITAL AGENCY CORP has not done very well: it is down 13.54% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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 revenue fell significantly faster than the industry average of 8.0%. Since the same quarter one year prior, revenues fell by 30.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for AMERICAN CAPITAL AGENCY CORP is currently very high, coming in at 88.74%. Regardless of AGNC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AGNC's net profit margin of -263.48% significantly underperformed when compared to the industry average.

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Crestwood Equity Partners

Dividend Yield: 13.50%

Crestwood Equity Partners

(NYSE:

CEQP

) shares currently have a dividend yield of 13.50%.

Crestwood Equity Partners LP provides infrastructure solutions to liquids-rich natural gas and crude oil shale plays in the United States. It operates through three segments: Gathering and Processing; Storage and Transportation; and Marketing, Supply, and Logistics.

The average volume for Crestwood Equity Partners has been 1,150,000 shares per day over the past 30 days. Crestwood Equity Partners has a market cap of $1.2 billion and is part of the energy industry. Shares are down 13% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Crestwood Equity Partners

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, 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 when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 3767.4% when compared to the same quarter one year ago, falling from $38.40 million to -$1,408.30 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 Oil, Gas & Consumable Fuels industry and the overall market, CRESTWOOD EQUITY PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CRESTWOOD EQUITY PARTNERS LP is currently lower than what is desirable, coming in at 29.25%. Regardless of CEQP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CEQP's net profit margin of -223.85% significantly underperformed when compared to the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 72.66%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1089.04% compared to 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.
  • CRESTWOOD EQUITY PARTNERS LP 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 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, CRESTWOOD EQUITY PARTNERS LP swung to a loss, reporting -$34.27 versus $3.20 in the prior year. This year, the market expects an improvement in earnings (-$0.01 versus -$34.27).

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