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."

Western Asset Mortgage Capital

Dividend Yield: 17.50%

Western Asset Mortgage Capital

(NYSE:

WMC

) shares currently have a dividend yield of 17.50%.

Western Asset Mortgage Capital Corporation operates as a real estate investment trust in the United States.

The average volume for Western Asset Mortgage Capital has been 559,100 shares per day over the past 30 days. Western Asset Mortgage Capital has a market cap of $430.5 million and is part of the real estate industry. Shares are up 0.5% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Western Asset Mortgage Capital

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, 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, 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 230.1% when compared to the same quarter one year ago, falling from $15.44 million to -$20.09 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 Real Estate Investment Trusts (REITs) industry and the overall market, WESTERN ASSET MTG CAPITAL CP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 33.97%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 232.43% 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.
  • WESTERN ASSET MTG CAPITAL CP 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, WESTERN ASSET MTG CAPITAL CP swung to a loss, reporting -$0.25 versus $2.36 in the prior year. This year, the market expects an improvement in earnings ($1.54 versus -$0.25).
  • WMC, with its very weak revenue results, has greatly underperformed against the industry average of 7.9%. Since the same quarter one year prior, revenues plummeted by 118.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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Fifth Street Senior Floating Rate

Dividend Yield: 11.80%

Fifth Street Senior Floating Rate

(NASDAQ:

FSFR

) shares currently have a dividend yield of 11.80%.

Fifth Street Senior Floating Rate Corp. The company has a P/E ratio of 7.65.

The average volume for Fifth Street Senior Floating Rate has been 127,400 shares per day over the past 30 days. Fifth Street Senior Floating Rate has a market cap of $225.4 million and is part of the financial services industry. Shares are down 10.3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Fifth Street Senior Floating Rate

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, 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, 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 Capital Markets industry. The net income has significantly decreased by 305.2% when compared to the same quarter one year ago, falling from $6.48 million to -$13.31 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. Compared to other companies in the Capital Markets industry and the overall market, FIFTH STREET SR FLTG RATE CP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 30.75%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 304.54% 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.
  • FIFTH STREET SR FLTG RATE CP 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, FIFTH STREET SR FLTG RATE CP reported lower earnings of $0.54 versus $0.97 in the prior year. This year, the market expects an improvement in earnings ($0.95 versus $0.54).
  • The gross profit margin for FIFTH STREET SR FLTG RATE CP is rather high; currently it is at 66.66%. Regardless of FSFR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FSFR's net profit margin of -95.63% significantly underperformed when compared to the industry average.

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Westmoreland Resource Partners

Dividend Yield: 16.30%

Westmoreland Resource Partners

(NYSE:

WMLP

) shares currently have a dividend yield of 16.30%.

Westmoreland Resource Partners, LP produces and markets thermal coal in the United States. It also produces surface mined coal in Ohio.

The average volume for Westmoreland Resource Partners has been 8,800 shares per day over the past 30 days. Westmoreland Resource Partners has a market cap of $28.2 million and is part of the metals & mining industry. Shares are up 25.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Westmoreland Resource Partners

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:

  • WMLP'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 61.67%, 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.
  • WESTMORELAND RES PARTNERS LP reported significant earnings per share improvement 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, WESTMORELAND RES PARTNERS LP reported poor results of -$5.71 versus -$4.61 in the prior year.
  • 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 64.9% when compared to the same quarter one year prior, rising from -$24.00 million to -$8.43 million.
  • The revenue growth greatly exceeded the industry average of 34.7%. Since the same quarter one year prior, revenues rose by 29.4%. Growth in the company's revenue appears to have helped boost the earnings per share.

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