4 Sell-Rated Dividend Stocks: LPHI, MITT, TEU, AT

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."

Life Partners Holdings

Dividend Yield: 11.50%

Life Partners Holdings (NASDAQ: LPHI) shares currently have a dividend yield of 11.50%.

Life Partners Holdings, Inc., through its subsidiary, Life Partners, Inc., operates in the secondary market for life insurance in the United States. It facilitates the sale of life settlements between sellers and purchasers, but does not take possession or control of the policies.

The average volume for Life Partners Holdings has been 59,600 shares per day over the past 30 days. Life Partners Holdings has a market cap of $65.1 million and is part of the insurance industry. Shares are up 32.7% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Life Partners Holdings as a sell. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity.

Highlights from the ratings report include:
  • 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 Diversified Financial Services industry and the overall market, LIFE PARTNERS HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • LIFE PARTNERS HOLDINGS INC has improved earnings per share by 20.0% 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, LIFE PARTNERS HOLDINGS INC swung to a loss, reporting -$0.17 versus $1.25 in the prior year.
  • The revenue fell significantly faster than the industry average of 4.1%. Since the same quarter one year prior, revenues fell by 35.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Net operating cash flow has significantly increased by 237.53% to $1.03 million when compared to the same quarter last year. Despite an increase in cash flow of 237.53%, LIFE PARTNERS HOLDINGS INC is still growing at a significantly lower rate than the industry average of 613.37%.
  • Investors have driven up the company's shares by 65.09% over the past year, a rise that has exceeded that of the S&P 500 Index. Despite the fact that the stock's value has already enjoyed nice gains in the past year, we feel that the risks surrounding an investment in this stock outweigh any potential future returns.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

AG Mortgage Investment

Dividend Yield: 13.40%

AG Mortgage Investment (NYSE: MITT) shares currently have a dividend yield of 13.40%.

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 3.47.

The average volume for AG Mortgage Investment has been 401,900 shares per day over the past 30 days. AG Mortgage Investment has a market cap of $667.9 million and is part of the real estate industry. Shares are up 1.1% year to date as of the close of trading on Thursday.

TheStreet Ratings rates AG Mortgage Investment as a sell. Among the areas we feel are negative, one of the most important has been the company's poor growth in earnings per share.

Highlights from the ratings report include:
  • AG MORTGAGE INVESTMENT TRUST's earnings per share declined by 36.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings 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 56.4% in earnings ($3.20 versus $7.34).
  • The gross profit margin for AG MORTGAGE INVESTMENT TRUST is currently very high, coming in at 88.50%. 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 33.68% compares favorably to the industry average.
  • MITT's share price has surged by 26.52% over the past year, reflecting the market's general trend, despite their weak earnings growth during the last quarter. 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.
  • Net operating cash flow has significantly increased by 216.09% to $36.44 million when compared to the same quarter last year. In addition, AG MORTGAGE INVESTMENT TRUST has also vastly surpassed the industry average cash flow growth rate of -16.25%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Box Ships

Dividend Yield: 11.50%

Box Ships (NYSE: TEU) shares currently have a dividend yield of 11.50%.

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 6.03.

The average volume for Box Ships has been 306,600 shares per day over the past 30 days. Box Ships has a market cap of $103.8 million and is part of the transportation industry. Shares are down 0.5% 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, deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • BOX SHIPS INC's earnings per share declined by 48.3% in the most recent quarter compared to 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 underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Marine industry average. The net income has decreased by 13.8% when compared to the same quarter one year ago, dropping from $4.66 million to $4.02 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. 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 42.33%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 48.27% 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.
  • Net operating cash flow has increased to $10.18 million or 13.03% when compared to the same quarter last year. Despite an increase in cash flow, BOX SHIPS INC's cash flow growth rate is still lower than the industry average growth rate of 46.61%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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.

The average volume for Atlantic Power Corporation has been 1,635,700 shares per day over the past 30 days. Atlantic Power Corporation has a market cap of $581.1 million and is part of the utilities industry. Shares are down 57.6% 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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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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