5 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 5 stocks with substantial yields, that ultimately, we have rated "Sell."

Roundys

Dividend Yield: 7.30%

Roundys (NYSE: RNDY) shares currently have a dividend yield of 7.30%.

Roundy's, Inc. engages in the operation of retail grocery stores. Currently there are no analysts that rate Roundys a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Roundys has been 486,000 shares per day over the past 30 days. Roundys has a market cap of $299.6 million and is part of the retail industry. Shares are up 47.6% year to date as of the close of trading on Thursday.

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 39.17%, 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.

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Charm Communications

Dividend Yield: 10.20%

Charm Communications (NASDAQ: CHRM) shares currently have a dividend yield of 10.20%.

Charm Communications Inc. operates as an advertising agency in China. The company offers a range of advertising agency services from planning and managing the advertising campaigns to creating and placing the advertisements. Currently there is 1 analyst that rates Charm Communications a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Charm Communications has been 8,600 shares per day over the past 30 days. Charm Communications has a market cap of $191.0 million and is part of the media industry. Shares are up 21.3% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Charm Communications 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, 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 Media industry. The net income has significantly decreased by 134.2% when compared to the same quarter one year ago, falling from $14.79 million to -$5.06 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 Media industry and the overall market, CHARM COMMUNICATIONS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CHARM COMMUNICATIONS INC is currently lower than what is desirable, coming in at 27.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -10.73% is significantly below that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 47.65%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 136.11% 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.
  • CHARM COMMUNICATIONS 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CHARM COMMUNICATIONS INC swung to a loss, reporting -$0.12 versus $1.12 in the prior year. This year, the market expects an improvement in earnings ($0.37 versus -$0.12).

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: 18.90%

Box Ships (NYSE: TEU) shares currently have a dividend yield of 18.90%.

Box Ships Inc., a shipping company, engages in the seaborne transportation of containers worldwide. As of December 31, 2012, it had a fleet of 9 containerships with a total capacity of approximately 43,925 twenty-foot equivalent units. The company has a P/E ratio of 8.61. 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 314,800 shares per day over the past 30 days. Box Ships has a market cap of $97.3 million and is part of the transportation industry. Shares are up 14.1% year to date as of the close of trading on Thursday.

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 47.40%, 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.

AG Mortgage Investment

Dividend Yield: 12.60%

AG Mortgage Investment (NYSE: MITT) shares currently have a dividend yield of 12.60%.

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 382,300 shares per day over the past 30 days. AG Mortgage Investment has a market cap of $699.7 million and is part of the real estate industry. Shares are up 8.5% year to date as of the close of trading on Thursday.

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 32.31% 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.

Atlantic Power Corporation

Dividend Yield: 7.90%

Atlantic Power Corporation (NYSE: AT) shares currently have a dividend yield of 7.90%.

Atlantic Power Corporation operates as a power generation and infrastructure company with a portfolio of assets in the United States and Canada. Currently there is 1 analyst that rates Atlantic Power Corporation a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Atlantic Power Corporation has been 1,558,800 shares per day over the past 30 days. Atlantic Power Corporation has a market cap of $589.1 million and is part of the utilities industry. Shares are down 56.9% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Atlantic Power Corporation as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 2.26 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 0.36, which clearly demonstrates the inability to cover short-term cash needs.
  • 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 Independent Power Producers & Energy Traders industry and the overall market, ATLANTIC POWER CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • AT'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 31.48%, 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.
  • ATLANTIC POWER CORP 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, ATLANTIC POWER CORP swung to a loss, reporting -$0.42 versus $0.01 in the prior year.
  • 38.90% is the gross profit margin for ATLANTIC POWER CORP which we consider to be strong. Regardless of AT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AT's net profit margin of -4.81% significantly underperformed when compared 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.

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.

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