5 Sell-Rated Dividend Stocks: AMID, MITT, EFC, STB, LPHI

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

American Midstream Partners

Dividend Yield: 8.20%

American Midstream Partners (NYSE: AMID) shares currently have a dividend yield of 8.20%.

American Midstream Partners, LP engages in gathering, treating, processing, and transporting natural gas in the Gulf Coast and Southeast regions of the United States.

The average volume for American Midstream Partners has been 26,200 shares per day over the past 30 days. American Midstream Partners has a market cap of $98.2 million and is part of the utilities industry. Shares are up 50.7% year to date as of the close of trading on Friday.

TheStreet Ratings rates American Midstream Partners as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and weak operating cash flow.

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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 310.1% when compared to the same quarter one year ago, falling from $1.69 million to -$3.55 million.
  • Currently the debt-to-equity ratio of 1.91 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.04, 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 Oil, Gas & Consumable Fuels industry and the overall market, AMERICAN MIDSTREAM PRTNRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for AMERICAN MIDSTREAM PRTNRS LP is currently extremely low, coming in at 5.69%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -5.63% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $1.10 million or 73.63% when compared to the same quarter last year. Despite a decrease in cash flow AMERICAN MIDSTREAM PRTNRS LP is still fairing well by exceeding its industry average cash flow growth rate of -86.32%.

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: 18.60%

AG Mortgage Investment (NYSE: MITT) shares currently have a dividend yield of 18.60%.

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 2.49.

The average volume for AG Mortgage Investment has been 491,900 shares per day over the past 30 days. AG Mortgage Investment has a market cap of $479.6 million and is part of the real estate industry. Shares are down 25.7% year to date as of the close of trading on Friday.

TheStreet Ratings rates AG Mortgage Investment as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • The share price of AG MORTGAGE INVESTMENT TRUST has not done very well: it is down 23.69% 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.
  • 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 57.1% in earnings ($3.15 versus $7.34).
  • The gross profit margin for AG MORTGAGE INVESTMENT TRUST is currently very high, coming in at 88.45%. 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.
  • 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 -81.00%.

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

Ellington Financial

Dividend Yield: 13.90%

Ellington Financial (NYSE: EFC) shares currently have a dividend yield of 13.90%.

No company description available. The company has a P/E ratio of 4.13.

The average volume for Ellington Financial has been 254,600 shares per day over the past 30 days. Ellington Financial has a market cap of $561.6 million and is part of the real estate industry. Shares are up 0.2% year to date as of the close of trading on Friday.

TheStreet Ratings rates Ellington Financial as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • In its most recent trading session, EFC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • ELLINGTON FINANCIAL LLC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ELLINGTON FINANCIAL LLC increased its bottom line by earning $5.32 versus $0.61 in the prior year. For the next year, the market is expecting a contraction of 24.8% in earnings ($4.00 versus $5.32).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Capital Markets industry average, but is greater than that of the S&P 500. The net income increased by 25.8% when compared to the same quarter one year prior, rising from $32.06 million to $40.34 million.
  • Net operating cash flow has increased to -$26.54 million or 14.76% when compared to the same quarter last year. Despite an increase in cash flow, ELLINGTON FINANCIAL LLC's cash flow growth rate is still lower than the industry average growth rate of 44.54%.
  • The gross profit margin for ELLINGTON FINANCIAL LLC is rather high; currently it is at 69.15%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, EFC's net profit margin of 219.42% significantly outperformed against the industry.

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: 8.10%

Student Transportation (NASDAQ: STB) shares currently have a dividend yield of 8.10%.

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 66.80.

The average volume for Student Transportation has been 128,300 shares per day over the past 30 days. Student Transportation has a market cap of $541.1 million and is part of the diversified services industry. Shares are up 7.2% year to date as of the close of trading on Friday.

TheStreet Ratings rates Student Transportation 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, poor profit margins, weak operating cash flow and generally high debt management risk.

Highlights from the ratings report include:
  • 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 26.88%. 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.
  • 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 1.28, demonstrating the ability to handle short-term liquidity needs.

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

Life Partners Holdings

Dividend Yield: 7.50%

Life Partners Holdings (NASDAQ: LPHI) shares currently have a dividend yield of 7.50%.

Life Partners Holdings, Inc., through its subsidiary, Life Partners, Inc., operates in the secondary market for life insurance worldwide. 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 49,800 shares per day over the past 30 days. Life Partners Holdings has a market cap of $50.0 million and is part of the insurance industry. Shares are up 1.9% year to date as of the close of trading on Friday.

TheStreet Ratings rates Life Partners Holdings as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • 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. 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.
  • Net operating cash flow has significantly decreased to -$2.87 million or 63.29% when compared to the same quarter last year. Despite a decrease in cash flow LIFE PARTNERS HOLDINGS INC is still fairing well by exceeding its industry average cash flow growth rate of -100.02%.
  • LPHI, with its very weak revenue results, has greatly underperformed against the industry average of 11.0%. Since the same quarter one year prior, revenues plummeted by 59.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • LIFE PARTNERS HOLDINGS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable Earnings per share over the past year indicate the company has sound management over its earnings and share float. During the past fiscal year, LIFE PARTNERS HOLDINGS INC continued to lose money by earning -$0.16 versus -$0.17 in the prior year.

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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