4 Sell-Rated Dividend Stocks: AMTG, VLCCF, STB, TAC

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."

Apollo Residential Mortgage

Dividend Yield: 17.30%

Apollo Residential Mortgage (NYSE: AMTG) shares currently have a dividend yield of 17.30%.

Apollo Residential Mortgage, Inc. operates as a residential real estate trust that invests in, finances, and manages residential mortgage assets in the United States. Its investment portfolio includes agency and non-agency residential mortgage-backed securities. The company has a P/E ratio of 2.49

The average volume for Apollo Residential Mortgage has been 608,100 shares per day over the past 30 days Apollo Residential Mortgage has a market cap of $517.7 million and is part of the real estate industry Shares are down 20.9% year to date as of the close of trading on Wednesday

TheStreet Ratings rates Apollo Residential Mortgage as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share and unimpressive growth in net income.

Highlights from the ratings report include:
  • APOLLO RESIDENTIAL MTG 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. For the next year, the market is expecting a contraction of 65.2% in earnings ($2.85 versus $8.19).
  • 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 73.5% when compared to the same quarter one year ago, falling from $20.12 million to $5.34 million.
  • The share price of APOLLO RESIDENTIAL MTG INC has not done very well: it is down 13.65% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter.
  • The gross profit margin for APOLLO RESIDENTIAL MTG INC is currently very high, coming in at 85.30%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, AMTG's net profit margin of 13.95% significantly trails the industry average.
  • Net operating cash flow has significantly increased by 161.21% to $19.12 million when compared to the same quarter last year. In addition, APOLLO RESIDENTIAL MTG INC has also vastly surpassed the industry average cash flow growth rate of -0.16%.

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

Knightsbridge Tankers

Dividend Yield: 10.00%

Knightsbridge Tankers (NASDAQ: VLCCF) shares currently have a dividend yield of 10.00%.

Knightsbridge Tankers Limited, through its subsidiaries, engages in the seaborne transportation of crude oil and dry bulk cargoes worldwide. The company's customers include oil companies, tanker companies, dry bulk companies, petroleum products traders, government agencies, and other entities.

The average volume for Knightsbridge Tankers has been 236,400 shares per day over the past 30 days Knightsbridge Tankers has a market cap of $171.3 million and is part of the transportation industry Shares are up 33.3% year to date as of the close of trading on Wednesday

TheStreet Ratings rates Knightsbridge Tankers 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:
  • KNIGHTSBRIDGE TANKERS LTD 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, KNIGHTSBRIDGE TANKERS LTD reported lower earnings of $1.33 versus $2.12 in the prior year. For the next year, the market is expecting a contraction of 94.7% in earnings ($0.07 versus $1.33).
  • 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 727.9% when compared to the same quarter one year ago, falling from $9.08 million to -$57.01 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 Oil, Gas & Consumable Fuels industry and the overall market, KNIGHTSBRIDGE TANKERS LTD'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 54.77%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 729.72% 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 revenue fell significantly faster than the industry average of 6.6%. Since the same quarter one year prior, revenues fell by 39.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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

Student Transportation

Dividend Yield: 8.70%

Student Transportation (NASDAQ: STB) shares currently have a dividend yield of 8.70%.

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 60.70

The average volume for Student Transportation has been 91,800 shares per day over the past 30 days Student Transportation has a market cap of $491.7 million and is part of the diversified services industry Shares are down 1.1% year to date as of the close of trading on Wednesday

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, feeble growth in its earnings per share, unimpressive growth in net income, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • The share price of STUDENT TRANSPORTATION INC has not done very well: it is down 7.00% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
  • STUDENT TRANSPORTATION 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, 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 Road & Rail industry. The net income has significantly decreased by 42.2% when compared to the same quarter one year ago, falling from $3.04 million to $1.75 million.
  • The gross profit margin for STUDENT TRANSPORTATION INC is currently lower than what is desirable, coming in at 26.90%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.45% significantly trails the industry average.
  • Net operating cash flow has decreased to $13.70 million or 42.38% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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

TransAlta Corporation

Dividend Yield: 8.20%

TransAlta Corporation (NYSE: TAC) shares currently have a dividend yield of 8.20%.

TransAlta Corporation operates as a non-regulated electricity generation and energy marketing company in Canada, the United States, and Australia. The company engages in the generation and wholesale trade of electricity and other energy-related commodities and derivatives.

The average volume for TransAlta Corporation has been 103,800 shares per day over the past 30 days TransAlta Corporation has a market cap of $3.6 billion and is part of the utilities industry Shares are down 11% year to date as of the close of trading on Wednesday

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

Highlights from the ratings report include:
  • TRANSALTA CORP 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. During the past fiscal year, TRANSALTA CORP swung to a loss, reporting -$2.72 versus $1.30 in the prior year.
  • 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 Independent Power Producers & Energy Traders industry and the overall market, TRANSALTA CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of TRANSALTA CORP has not done very well: it is down 17.45% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
  • Even though the current debt-to-equity ratio is 1.42, it is still below the industry average, suggesting that this level of debt is acceptable within the Independent Power Producers & Energy Traders industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.41 is very low and demonstrates very weak liquidity.
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Independent Power Producers & Energy Traders industry average, but is less than that of the S&P 500. The net income has significantly decreased by 102.1% when compared to the same quarter one year ago, falling from $96.00 million to -$2.00 million.

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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