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."

Resource Capital

Dividend Yield: 15.90%

Resource Capital

(NYSE:

RSO

) shares currently have a dividend yield of 15.90%.

Resource Capital Corp., a diversified real estate investment trust, primarily focuses on originating, holding, and managing commercial mortgage loans and other commercial real estate-related debt and equity investments in the United States.

The average volume for Resource Capital has been 359,800 shares per day over the past 30 days. Resource Capital has a market cap of $335.9 million and is part of the real estate industry. Shares are down 17.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Resource Capital

as a

sell

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

Highlights from the ratings report include:

  • 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, RESOURCE CAPITAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Looking at the price performance of RSO's shares over the past 12 months, there is not much good news to report: the stock is down 46.15%, 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.
  • RESOURCE CAPITAL CORP's earnings per share declined by 12.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, RESOURCE CAPITAL CORP increased its bottom line by earning $1.36 versus $1.32 in the prior year. For the next year, the market is expecting a contraction of 112.5% in earnings (-$0.17 versus $1.36).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry average. The net income increased by 0.1% when compared to the same quarter one year prior, going from $12.87 million to $12.89 million.
  • The gross profit margin for RESOURCE CAPITAL CORP is rather high; currently it is at 65.36%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 27.92% is above that of the industry average.

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Memorial Production Partners

Dividend Yield: 19.80%

Memorial Production Partners

(NASDAQ:

MEMP

) shares currently have a dividend yield of 19.80%.

Memorial Production Partners LP, through its subsidiary, engages in the acquisition, development, exploitation, and production of oil and natural gas properties.

The average volume for Memorial Production Partners has been 1,243,700 shares per day over the past 30 days. Memorial Production Partners has a market cap of $167.7 million and is part of the energy industry. Shares are down 24.6% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Memorial Production Partners

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 289.9% when compared to the same quarter one year ago, falling from $101.16 million to -$192.09 million.
  • The debt-to-equity ratio is very high at 3.17 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 0.38, which clearly demonstrates the inability to cover short-term cash needs.
  • 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, MEMORIAL PRODUCTION PRTRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $73.85 million or 15.81% when compared to the same quarter last year. Despite a decrease in cash flow MEMORIAL PRODUCTION PRTRS LP is still fairing well by exceeding its industry average cash flow growth rate of -39.19%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 87.99%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 266.18% 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.

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Birner Dental Management Services

Dividend Yield: 8.80%

Birner Dental Management Services

(NASDAQ:

BDMS

) shares currently have a dividend yield of 8.80%.

Birner Dental Management Services, Inc. provides business services to dental group practices in Colorado, New Mexico, and Arizona.

The average volume for Birner Dental Management Services has been 1,000 shares per day over the past 30 days. Birner Dental Management Services has a market cap of $18.6 million and is part of the diversified services industry. Shares are down 11.1% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Birner Dental Management Services

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

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 4.38 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 0.21, which clearly demonstrates the inability to cover short-term cash needs.
  • 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 Health Care Providers & Services industry and the overall market, BIRNER DENTAL MGMT SVCS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for BIRNER DENTAL MGMT SVCS INC is rather low; currently it is at 20.39%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.43% trails that of the industry average.
  • BDMS'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 32.39%, 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.
  • BIRNER DENTAL MGMT SVCS INC has improved earnings per share by 45.5% 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, BIRNER DENTAL MGMT SVCS INC swung to a loss, reporting -$0.49 versus $0.05 in the prior year.

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