4 Sell-Rated Dividend Stocks

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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 and 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 4 stocks with substantial yields, that ultimately, we have rated "Sell."

Roundys

Dividend Yield: 7.10%

Roundys (NYSE: RNDY) shares currently have a dividend yield of 7.10%.

Roundy's, Inc. engages in the operation of retail grocery stores under the Pick `n Save, Rainbow, Copps, Metro Market, and Mariano's Fresh Market retail banners. The company has a P/E ratio of 6.30. Currently there are no analysts that rate Roundys a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Roundys has been 479,500 shares per day over the past 30 days. Roundys has a market cap of $310.4 million and is part of the retail industry. Shares are up 55.3% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Roundys as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, poor profit margins 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 Food & Staples Retailing industry. The net income has significantly decreased by 1172.7% when compared to the same quarter one year ago, falling from $9.17 million to -$98.36 million.
  • The debt-to-equity ratio is very high at 3.60 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 0.32, which clearly demonstrates the inability to cover short-term cash needs.
  • The gross profit margin for ROUNDY'S INC is currently lower than what is desirable, coming in at 28.30%. Regardless of RNDY's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, RNDY's net profit margin of -10.01% significantly underperformed when compared to the industry average.
  • ROUNDY'S INC has exprienced 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, ROUNDY'S INC swung to a loss, reporting -$1.54 versus $0.20 in the prior year. This year, the market expects an improvement in earnings ($0.95 versus -$1.54).
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 40.28%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1195.00% compared to the year-earlier quarter.

New From TheStreet: Jim Cramer's Protégé, Dave Peltier, only buys dividend stocks that have the potential for a 3% to 4% yield and 10% growth. Get his best picks for less than $50/year.

AG Mortgage Investment

Dividend Yield: 12.50%

AG Mortgage Investment (NYSE: MITT) shares currently have a dividend yield of 12.50%.

AG Mortgage Investment Trust, Inc., a real estate investment trust, focuses on investing, acquiring, and managing a portfolio of residential mortgage assets, and other real estate-related securities and financial assets. The company has a P/E ratio of 3.55. Currently there are 5 analysts that rate AG Mortgage Investment a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for AG Mortgage Investment has been 383,500 shares per day over the past 30 days. AG Mortgage Investment has a market cap of $700.8 million and is part of the real estate industry. Shares are up 7.2% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates AG Mortgage Investment as a sell. The area that we feel has been the company's primary weakness has been its feeble growth in its earnings per share.

Highlights from the ratings report include:
  • AG MORTGAGE INVESTMENT TRUST has improved earnings per share by 6.9% 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, AG MORTGAGE INVESTMENT TRUST increased its bottom line by earning $7.34 versus $2.01 in the prior year. For the next year, the market is expecting a contraction of 53.7% in earnings ($3.40 versus $7.34).
  • The gross profit margin for AG MORTGAGE INVESTMENT TRUST is currently very high, coming in at 89.80%. Regardless of MITT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MITT's net profit margin of 30.67% compares favorably to the industry average.
  • Investors have driven up the company's shares by 29.18% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the future course of this stock, we feel that the risks involved in investing in MITT do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 209.3% when compared to the same quarter one year prior, rising from $5.77 million to $17.85 million.

New From TheStreet: Jim Cramer's Protégé, Dave Peltier, only buys dividend stocks that have the potential for a 3% to 4% yield and 10% growth. Get his best picks for less than $50/year.

Box Ships

Dividend Yield: 16.60%

Box Ships (NYSE: TEU) shares currently have a dividend yield of 16.60%.

Box Ships Inc., a shipping company, engages in the seaborne transportation of containers worldwide. It owns and operates 7 containerships with a total capacity of approximately 33,000 twenty-foot equivalent units. The company was founded in 2010 and is based in Voula, Greece. The company has a P/E ratio of 9.80. Currently there are 2 analysts that rate Box Ships a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Box Ships has been 286,100 shares per day over the past 30 days. Box Ships has a market cap of $110.7 million and is part of the transportation industry. Shares are up 20% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Box Ships as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, unimpressive growth in net income, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • BOX SHIPS INC has exprienced 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 suffered a declining pattern earnings per share over the past two years. During the past fiscal year, BOX SHIPS INC reported lower earnings of $0.67 versus $0.80 in the prior year.
  • 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 Marine industry. The net income has significantly decreased by 48.4% when compared to the same quarter one year ago, falling from $5.57 million to $2.87 million.
  • 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. When compared to other companies in the Marine industry and the overall market, BOX SHIPS INC's return on equity is below 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 39.75%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 67.64% 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.
  • The gross profit margin for BOX SHIPS INC is currently very high, coming in at 70.10%. Regardless of TEU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TEU's net profit margin of 16.24% compares favorably to the industry average.

New From TheStreet: Jim Cramer's Protégé, Dave Peltier, only buys dividend stocks that have the potential for a 3% to 4% yield and 10% growth. Get his best picks for less than $50/year.

Student Transportation

Dividend Yield: 8.50%

Student Transportation (NASDAQ: STB) shares currently have a dividend yield of 8.50%.

Student Transportation Inc. provides school bus transportation and management services to public and private schools in North America. The company has a P/E ratio of 49.23. Currently there are 2 analysts that rate Student Transportation a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Student Transportation has been 90,100 shares per day over the past 30 days. Student Transportation has a market cap of $516.3 million and is part of the diversified services industry. Shares are up 4.2% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Student Transportation as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, poor profit margins and generally high debt management risk.

Highlights from the ratings report include:
  • STB has underperformed the S&P 500 Index, declining 6.12% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • The gross profit margin for STUDENT TRANSPORTATION INC is currently lower than what is desirable, coming in at 27.10%. Regardless of STB's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, STB's net profit margin of 2.49% is significantly lower than the industry average.
  • The debt-to-equity ratio of 1.13 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, STB's quick ratio is somewhat strong at 1.34, demonstrating the ability to handle short-term liquidity needs.
  • In comparison to the other companies in the Road & Rail industry and the overall market, STUDENT TRANSPORTATION INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has significantly increased by 85.17% to $22.19 million when compared to the same quarter last year. In addition, STUDENT TRANSPORTATION INC has also vastly surpassed the industry average cash flow growth rate of 22.68%.

New From TheStreet: Jim Cramer's Protégé, Dave Peltier, only buys dividend stocks that have the potential for a 3% to 4% yield and 10% growth. Get his best picks for less than $50/year.

Other helpful dividend tools from TheStreet:

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

null

More from Markets

Trump Takes Aim at Auto Imports; Markets End Mixed -- ICYMI

Trump Takes Aim at Auto Imports; Markets End Mixed -- ICYMI

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

REPLAY: Jim Cramer on the Markets, Oil, Starbucks, Tesla, Okta and Red Hat

REPLAY: Jim Cramer on the Markets, Oil, Starbucks, Tesla, Okta and Red Hat

Flashback Friday: The Market Movers

Flashback Friday: The Market Movers

OPEC Deal Doesn't Boost Production Enough to Drive Down Crude, Gasoline Prices

OPEC Deal Doesn't Boost Production Enough to Drive Down Crude, Gasoline Prices