5 Sell-Rated Dividend Stocks: DCIX, ALTV, TAC, ACRE, AMTG

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."

Diana Containerships

Dividend Yield: 14.70%

Diana Containerships (NASDAQ: DCIX) shares currently have a dividend yield of 14.70%.

Diana Containerships Inc., a shipping company, owns and operates containerships. It is involved in the seaborne transportation activities. As of March 4, 2013, its fleet consisted of 11 Panamax container vessels. The company was founded in 2010 and is based in Athens, Greece.

The average volume for Diana Containerships has been 440,000 shares per day over the past 30 days. Diana Containerships has a market cap of $136.3 million and is part of the transportation industry. Shares are down 32.6% year to date as of the close of trading on Friday.

TheStreet Ratings rates Diana Containerships 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, weak operating cash flow and generally disappointing historical performance in the stock itself.

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 Marine industry. The net income has significantly decreased by 325.3% when compared to the same quarter one year ago, falling from $2.24 million to -$5.05 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 Marine industry and the overall market, DIANA CONTAINERSHIPS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for DIANA CONTAINERSHIPS INC is currently lower than what is desirable, coming in at 30.17%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -41.20% is significantly below that of the industry average.
  • Net operating cash flow has declined marginally to $7.75 million or 4.99% when compared to the same quarter last year. Despite a decrease in cash flow of 4.99%, DIANA CONTAINERSHIPS INC is still significantly exceeding the industry average of -80.56%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 34.47%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 260.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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

Alteva

Dividend Yield: 10.80%

Alteva (NASDAQ: ALTV) shares currently have a dividend yield of 10.80%.

Alteva, Inc. provides cloud-based unified communications solutions for small, medium, and enterprise businesses.

The average volume for Alteva has been 13,500 shares per day over the past 30 days. Alteva has a market cap of $61.5 million and is part of the telecommunications industry. Shares are down 7.4% year to date as of the close of trading on Friday.

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

Highlights from the ratings report include:
  • 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 Diversified Telecommunication Services industry and the overall market, ALTEVA's return on equity significantly trails that of both the industry average and the S&P 500.
  • Even though the current debt-to-equity ratio is 1.18, it is still below the industry average, suggesting that this level of debt is acceptable within the Diversified Telecommunication Services industry. Despite the fact that ALTV's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.61 is low and demonstrates weak liquidity.
  • ALTV'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 27.44%, 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.
  • ALTEVA has improved earnings per share by 31.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ALTEVA reported poor results of -$1.67 versus -$0.54 in the prior year. This year, the market expects an improvement in earnings ($0.09 versus -$1.67).
  • The gross profit margin for ALTEVA is rather high; currently it is at 51.05%. 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 -10.76% 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.

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 company has a P/E ratio of 26.13.

The average volume for TransAlta Corporation has been 103,000 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 10.8% year to date as of the close of trading on Friday.

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

Highlights from the ratings report include:
  • Currently the debt-to-equity ratio of 1.51 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 0.49, which clearly demonstrates the inability to cover short-term cash needs.
  • TAC has underperformed the S&P 500 Index, declining 12.67% from its price level of one year ago. 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.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Independent Power Producers & Energy Traders industry average, but is greater than that of the S&P 500. The net income increased by 103.2% when compared to the same quarter one year prior, rising from -$791.00 million to $25.00 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Independent Power Producers & Energy Traders industry and the overall market, TRANSALTA CORP's return on equity is below that of both the industry average and the S&P 500.
  • TRANSALTA 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, TRANSALTA CORP swung to a loss, reporting -$2.72 versus $1.30 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.

Ares Commercial Real Estate

Dividend Yield: 7.80%

Ares Commercial Real Estate (NYSE: ACRE) shares currently have a dividend yield of 7.80%.

Ares Commercial Real Estate Corporation, a specialty finance company, operates as a real estate investment trust (REIT). It originates, invests in, and manages middle-market commercial real estate (CRE) loans and other commercial real estate investments. The company has a P/E ratio of 41.61.

The average volume for Ares Commercial Real Estate has been 508,000 shares per day over the past 30 days. Ares Commercial Real Estate has a market cap of $359.8 million and is part of the real estate industry. Shares are down 21.3% year to date as of the close of trading on Friday.

TheStreet Ratings rates Ares Commercial Real Estate 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 unimpressive growth in net income.

Highlights from the ratings report include:
  • The share price of ARES COMMERCIAL REAL ESTATE has not done very well: it is down 22.67% 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.
  • 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 35.6% when compared to the same quarter one year ago, falling from $0.51 million to $0.33 million.
  • ARES COMMERCIAL REAL ESTATE's earnings per share declined by 33.3% in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($0.66 versus $0.10).
  • The gross profit margin for ARES COMMERCIAL REAL ESTATE is rather high; currently it is at 54.57%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, ACRE's net profit margin of 4.87% is significantly lower than the industry average.
  • Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, ARES COMMERCIAL REAL ESTATE underperformed against that of the industry average and is significantly less than that of the S&P 500.

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

Apollo Residential Mortgage

Dividend Yield: 17.90%

Apollo Residential Mortgage (NYSE: AMTG) shares currently have a dividend yield of 17.90%.

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 5.52.

The average volume for Apollo Residential Mortgage has been 653,900 shares per day over the past 30 days. Apollo Residential Mortgage has a market cap of $500.1 million and is part of the real estate industry. Shares are down 21.8% year to date as of the close of trading on Friday.

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, unimpressive growth in net income and generally disappointing historical performance in the stock itself.

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 69.2% in earnings ($2.52 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 375.6% when compared to the same quarter one year ago, falling from $26.40 million to -$72.77 million.
  • The share price of APOLLO RESIDENTIAL MTG INC has not done very well: it is down 21.05% 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.
  • When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, APOLLO RESIDENTIAL MTG INC's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for APOLLO RESIDENTIAL MTG INC is currently very high, coming in at 87.06%. 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 -175.88% 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.

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