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."

Williams Companies

Dividend Yield: 17.30%

Williams Companies

(NYSE:

WMB

) shares currently have a dividend yield of 17.30%.

The Williams Companies, Inc. operates as an energy infrastructure company primarily in the United States. The company operates through Williams Partners, Williams NGL (natural gas liquids) & Petchem Services, and Other segments. The company has a P/E ratio of 19.49.

The average volume for Williams Companies has been 16,141,800 shares per day over the past 30 days. Williams Companies has a market cap of $11.1 billion and is part of the energy industry. Shares are down 39.7% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Williams Companies

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 470.5% when compared to the same quarter one year ago, falling from $193.00 million to -$715.00 million.
  • The debt-to-equity ratio is very high at 3.98 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 0.46, 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 on the basis of return on equity, WILLIAMS COS INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Net operating cash flow has decreased to $592.00 million or 41.44% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, WILLIAMS COS INC has marginally lower results.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 68.24%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 465.38% 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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VEREIT

Dividend Yield: 6.20%

VEREIT

(NASDAQ:

VER

) shares currently have a dividend yield of 6.20%.

VEREIT, Inc. is a publicly owned real estate investment trust. It owns and acquires single tenant, freestanding commercial real estate that is net leased on a medium-term basis, primarily to investment grade credit rated and other creditworthy tenants.

The average volume for VEREIT has been 6,230,500 shares per day over the past 30 days. VEREIT has a market cap of $8.0 billion and is part of the real estate industry. Shares are up 12.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

VEREIT

as a

sell

. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • VER has underperformed the S&P 500 Index, declining 9.95% from its price level of one year ago. 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, VEREIT INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has remained constant at $238.89 million with no significant change when compared to the same quarter last year. This quarter, VEREIT INC's cash flow growth rate has remained relatively unchanged and is slightly below the industry average.
  • VER, with its decline in revenue, underperformed when compared the industry average of 7.9%. Since the same quarter one year prior, revenues slightly dropped by 8.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • VEREIT INC has improved earnings per share by 43.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, VEREIT INC continued to lose money by earning -$0.43 versus -$1.44 in the prior year. This year, the market expects an improvement in earnings ($0.00 versus -$0.43).

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Tailored Brands

Dividend Yield: 4.20%

Tailored Brands

(NYSE:

TLRD

) shares currently have a dividend yield of 4.20%.

Tailored Brands, Inc. operates as a specialty apparel retailer in the United States, Puerto Rico, and Canada. The company operates in two segments, Retail and Corporate Apparel.

The average volume for Tailored Brands has been 1,341,000 shares per day over the past 30 days. Tailored Brands has a market cap of $821.7 million and is part of the retail industry. Shares are up 13.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Tailored Brands

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, 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 Specialty Retail industry. The net income has significantly decreased by 2844.5% when compared to the same quarter one year ago, falling from -$35.92 million to -$1,057.71 million.
  • Net operating cash flow has decreased to $19.46 million or 45.55% 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 65.71%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 2814.66% 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.
  • TAILORED BRANDS 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. 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, TAILORED BRANDS INC reported poor results of -$21.23 versus -$0.02 in the prior year. This year, the market expects an improvement in earnings ($1.70 versus -$21.23).
  • TLRD, with its decline in revenue, underperformed when compared the industry average of 10.5%. Since the same quarter one year prior, revenues fell by 11.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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