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."

USD Partners

Dividend Yield: 19.90%

USD Partners

(NYSE:

USDP

) shares currently have a dividend yield of 19.90%.

USD Partners LP acquires, develops, and operates energy-related rail terminals and other midstream infrastructure assets and businesses in the United States and Canada. The company operates through two segments, Terminalling Services and Fleet Services. The company has a P/E ratio of 11.62.

The average volume for USD Partners has been 89,400 shares per day over the past 30 days. USD Partners has a market cap of $126.0 million and is part of the transportation industry. Shares are down 11.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

USD Partners

as a

sell

. Among the areas we feel are negative, one of the most important has been very high debt management risk by most measures.

Highlights from the ratings report include:

  • Currently the debt-to-equity ratio of 1.98 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, USDP's quick ratio is somewhat strong at 1.38, demonstrating the ability to handle short-term liquidity needs.
  • USDP'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 50.82%, 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.
  • USD PARTNERS LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($0.80 versus -$0.12).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 564.4% when compared to the same quarter one year prior, rising from -$1.36 million to $6.33 million.
  • The gross profit margin for USD PARTNERS LP is rather high; currently it is at 54.01%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 29.01% significantly outperformed against the industry average.

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Icahn

Dividend Yield: 11.70%

Icahn

(NASDAQ:

IEP

) shares currently have a dividend yield of 11.70%.

Icahn Enterprises L.P., through its subsidiaries, operates in investment, automotive, energy, metals, railcar, gaming, food packaging, real estate, and home fashion businesses in the United States, Germany, and Internationally. Its Investment segment operates various private investment funds.

The average volume for Icahn has been 149,100 shares per day over the past 30 days. Icahn has a market cap of $6.6 billion and is part of the conglomerates industry. Shares are down 15.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Icahn

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, poor profit margins 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 underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Industrial Conglomerates industry average. The net income has decreased by 23.7% when compared to the same quarter one year ago, dropping from -$355.00 million to -$439.00 million.
  • The debt-to-equity ratio is very high at 2.60 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • 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 Industrial Conglomerates industry and the overall market, ICAHN ENTERPRISES LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ICAHN ENTERPRISES LP is currently extremely low, coming in at 0.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -13.82% is significantly below that of the industry average.
  • Looking at the price performance of IEP's shares over the past 12 months, there is not much good news to report: the stock is down 44.38%, 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.

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KNOT Offshore Partners

Dividend Yield: 13.00%

KNOT Offshore Partners

(NYSE:

KNOP

) shares currently have a dividend yield of 13.00%.

KNOT Offshore Partners LP owns and operates shuttle tankers under long-term charters in the North Sea and Brazil. The company provides crude oil loading, transportation, and storage services under time charters and bareboat charters. The company has a P/E ratio of 15.05.

The average volume for KNOT Offshore Partners has been 140,900 shares per day over the past 30 days. KNOT Offshore Partners has a market cap of $356.9 million and is part of the transportation industry. Shares are up 17.9% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

KNOT Offshore Partners

as a

sell

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

Highlights from the ratings report include:

  • The debt-to-equity ratio of 1.29 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • KNOP'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 35.15%, 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.
  • 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, KNOT OFFSHORE PRTNRS LP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • The gross profit margin for KNOT OFFSHORE PRTNRS LP is currently very high, coming in at 82.00%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 41.41% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $25.39 million or 17.44% when compared to the same quarter last year. In addition, KNOT OFFSHORE PRTNRS LP has also vastly surpassed the industry average cash flow growth rate of -39.24%.

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