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."

SeaWorld Entertainment

Dividend Yield: 4.40%

SeaWorld Entertainment

(NYSE:

SEAS

) shares currently have a dividend yield of 4.40%.

SeaWorld Entertainment, Inc. operates as a theme park and entertainment company in the United States. The company has a P/E ratio of 46.98.

The average volume for SeaWorld Entertainment has been 1,458,400 shares per day over the past 30 days. SeaWorld Entertainment has a market cap of $1.7 billion and is part of the leisure industry. Shares are down 2.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

SeaWorld Entertainment

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and disappointing return on equity.

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 2.96 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, SEAS has a quick ratio of 0.68, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • 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. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, SEAWORLD ENTERTAINMENT INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • SEAWORLD ENTERTAINMENT INC has improved earnings per share by 14.0% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, SEAWORLD ENTERTAINMENT INC reported lower earnings of $0.58 versus $0.59 in the prior year. This year, the market expects an improvement in earnings ($0.77 versus $0.58).
  • The stock has risen over the past year at a faster pace than the S&P 500, reflecting the earnings growth of the company. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • Net operating cash flow has slightly increased to $137.84 million or 1.03% when compared to the same quarter last year. Despite an increase in cash flow, SEAWORLD ENTERTAINMENT INC's average is still marginally south of the industry average growth rate of 8.56%.

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Outfront Media

Dividend Yield: 6.40%

Outfront Media

(NYSE:

OUT

) shares currently have a dividend yield of 6.40%.

OUTFRONT Media Inc. provides advertising space on out-of-home advertising structures and sites in the United States, Canada, and Latin America. The company has a P/E ratio of 40.77.

The average volume for Outfront Media has been 643,800 shares per day over the past 30 days. Outfront Media has a market cap of $2.9 billion and is part of the real estate industry. Shares are down 3.5% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Outfront Media

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, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • OUTFRONT MEDIA 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. For the next year, the market is expecting a contraction of 80.0% in earnings ($0.51 versus $2.55).
  • 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 91.5% when compared to the same quarter one year ago, falling from $248.30 million to $21.20 million.
  • Net operating cash flow has decreased to $102.30 million or 14.53% 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.
  • The share price of OUTFRONT MEDIA INC has not done very well: it is down 19.64% 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.
  • 43.63% is the gross profit margin for OUTFRONT MEDIA INC which we consider to be strong. Regardless of OUT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OUT's net profit margin of 5.48% is significantly lower than the industry average.

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Kennametal

Dividend Yield: 4.60%

Kennametal

(NYSE:

KMT

) shares currently have a dividend yield of 4.60%.

Kennametal Inc. manufactures and supplies tooling, engineered components, and advanced materials consumed in production processes worldwide. It operates through two segments, Industrial and Infrastructure.

The average volume for Kennametal has been 1,421,200 shares per day over the past 30 days. Kennametal has a market cap of $1.4 billion and is part of the industrial industry. Shares are down 10.5% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Kennametal

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, 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 Machinery industry. The net income has significantly decreased by 115.8% when compared to the same quarter one year ago, falling from $39.49 million to -$6.23 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 Machinery industry and the overall market, KENNAMETAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for KENNAMETAL INC is currently lower than what is desirable, coming in at 32.08%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.12% trails that of the industry average.
  • Net operating cash flow has declined marginally to $38.71 million or 9.03% when compared to the same quarter last year. Despite a decrease in cash flow of 9.03%, KENNAMETAL INC is in line with the industry average cash flow growth rate of -18.68%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 47.91%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 116.32% 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.

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