4 Sell-Rated Dividend Stocks: CYS, ERF, TROX, ECA

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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."

CYS Investments

Dividend Yield: 16.20%

CYS Investments (NYSE: CYS) shares currently have a dividend yield of 16.20%.

No company description available.

The average volume for CYS Investments has been 3,248,500 shares per day over the past 30 days. CYS Investments has a market cap of $1.5 billion and is part of the real estate industry. Shares are down 28.9% year to date as of the close of trading on Monday.

TheStreet Ratings rates CYS Investments 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:
  • CYS INVESTMENTS 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, CYS INVESTMENTS INC reported lower earnings of $2.75 versus $3.63 in the prior year. For the next year, the market is expecting a contraction of 74.9% in earnings ($0.69 versus $2.75).
  • 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 491.6% when compared to the same quarter one year ago, falling from $101.71 million to -$398.29 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, CYS INVESTMENTS INC'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 41.33%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 366.66% 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 CYS INVESTMENTS INC is currently very high, coming in at 93.05%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -488.38% is in-line with 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.

Enerplus

Dividend Yield: 6.40%

Enerplus (NYSE: ERF) shares currently have a dividend yield of 6.40%.

Enerplus Corporation, together with subsidiaries, engages in the exploration and development of crude oil and natural gas in the United States and Canada.

The average volume for Enerplus has been 838,000 shares per day over the past 30 days. Enerplus has a market cap of $3.3 billion and is part of the energy industry. Shares are up 25.5% year to date as of the close of trading on Monday.

TheStreet Ratings rates Enerplus 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 Oil, Gas & Consumable Fuels industry and the overall market, ENERPLUS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • ENERPLUS 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, ENERPLUS CORP swung to a loss, reporting -$0.79 versus $0.62 in the prior year.
  • The current debt-to-equity ratio, 0.37, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.44 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • The gross profit margin for ENERPLUS CORP is rather high; currently it is at 67.41%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -1.92% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 133.73% to $161.23 million when compared to the same quarter last year. In addition, ENERPLUS CORP has also vastly surpassed the industry average cash flow growth rate of -26.07%.

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

Tronox

Dividend Yield: 4.80%

Tronox (NYSE: TROX) shares currently have a dividend yield of 4.80%.

Tronox Limited produces and markets titanium ore and titanium dioxide in the Americas, Europe, and the Asia-Pacific. It offers titanium dioxide pigment, which is used in consumer products, such as paint, plastic, and certain specialty products. The company has a P/E ratio of 2.20.

The average volume for Tronox has been 642,100 shares per day over the past 30 days. Tronox has a market cap of $1.3 billion and is part of the chemicals industry. Shares are up 15.1% year to date as of the close of trading on Monday.

TheStreet Ratings rates Tronox as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, 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 Chemicals industry. The net income has significantly decreased by 166.0% when compared to the same quarter one year ago, falling from $86.30 million to -$57.00 million.
  • The gross profit margin for TRONOX LTD is rather low; currently it is at 24.04%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -12.12% is significantly below that of the industry average.
  • The share price of TRONOX LTD has not done very well: it is down 9.24% 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.
  • TRONOX 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. 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, TRONOX LTD increased its bottom line by earning $13.61 versus $11.06 in the prior year. For the next year, the market is expecting a contraction of 101.9% in earnings (-$0.27 versus $13.61).
  • TROX's debt-to-equity ratio of 0.97 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 4.71 is very high and demonstrates very strong liquidity.

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

Encana

Dividend Yield: 4.40%

Encana (NYSE: ECA) shares currently have a dividend yield of 4.40%.

Encana Corporation and its subsidiaries engage in the exploration for, development, production, and marketing of natural gas, oil, and natural gas liquids in Canada and the United States.

The average volume for Encana has been 4,454,900 shares per day over the past 30 days. Encana has a market cap of $13.3 billion and is part of the energy industry. Shares are down 11% year to date as of the close of trading on Monday.

TheStreet Ratings rates Encana 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, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • ENCANA 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, ENCANA CORP swung to a loss, reporting -$3.79 versus $0.15 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 3691.7% when compared to the same quarter one year ago, falling from $12.00 million to -$431.00 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, ENCANA CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ENCANA CORP is currently lower than what is desirable, coming in at 33.43%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -40.69% is significantly below that of the industry average.
  • Net operating cash flow has decreased to $338.00 million or 45.21% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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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