What To Sell: 5 Sell-Rated Dividend Stocks GMLP, OIBR, NAT, STB, EROC

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."

Golar LNG Partners

Dividend Yield: 7.30%

Golar LNG Partners (NASDAQ: GMLP) shares currently have a dividend yield of 7.30%.

Golar LNG Partners LP owns and operates floating storage regasification units (FSRUs) and liquefied natural gas (LNG) carriers primarily in the Brazil, the United Arab Emirates, and Indonesia. As of December 5, 2013, its fleet consisted of three FSRUs and two LNG carriers. The company has a P/E ratio of 13.78.

The average volume for Golar LNG Partners has been 165,600 shares per day over the past 30 days. Golar LNG Partners has a market cap of $1.0 billion and is part of the transportation industry. Shares are down 4% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Golar LNG Partners 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:
  • The debt-to-equity ratio is very high at 3.48 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • In its most recent trading session, GMLP 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.
  • 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. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, GOLAR LNG PARTNERS LP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • GOLAR LNG PARTNERS LP's earnings per share declined by 13.7% 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, GOLAR LNG PARTNERS LP increased its bottom line by earning $2.66 versus $1.76 in the prior year.
  • The gross profit margin for GOLAR LNG PARTNERS LP is currently very high, coming in at 84.81%. Regardless of GMLP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GMLP's net profit margin of 40.37% 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.

Oi

Dividend Yield: 15.80%

Oi (NYSE: OIBR) shares currently have a dividend yield of 15.80%.

Oi S.A., through its subsidiaries, provides integrated telecommunication services for residential customers, companies, and governmental agencies in Brazil. It operates in three segments: Fixed-Line and Data Transmission Services, Mobile Services, and Other Services.

The average volume for Oi has been 4,754,800 shares per day over the past 30 days. Oi has a market cap of $2.5 billion and is part of the telecommunications industry. Shares are down 61.4% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Oi 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, generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • OI SA's earnings per share declined by 44.4% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, OI SA reported lower earnings of $0.79 versus $0.92 in the prior year. For the next year, the market is expecting a contraction of 82.8% in earnings ($0.14 versus $0.79).
  • 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 Diversified Telecommunication Services industry. The net income has significantly decreased by 50.0% when compared to the same quarter one year ago, falling from $154.51 million to $77.31 million.
  • The debt-to-equity ratio is very high at 3.36 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, OIBR has a quick ratio of 0.69, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 60.26%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 44.44% 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.
  • OIBR, with its decline in revenue, slightly underperformed the industry average of 3.6%. Since the same quarter one year prior, revenues slightly dropped by 7.5%. The declining revenue appears to have seeped down to the company's 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.

Nordic American Tankers

Dividend Yield: 7.80%

Nordic American Tankers (NYSE: NAT) shares currently have a dividend yield of 7.80%.

Nordic American Tankers Limited, a tanker company, engages in acquiring and chartering double-hull tankers. Its fleet consists of 20 double-hull Suezmax tankers. The company was founded in 1995 and is headquartered in Hamilton, Bermuda.

The average volume for Nordic American Tankers has been 1,073,600 shares per day over the past 30 days. Nordic American Tankers has a market cap of $611.1 million and is part of the transportation industry. Shares are down 5.8% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Nordic American Tankers as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow, poor profit margins and generally disappointing historical performance in the stock itself.

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, NORDIC AMERICAN TANKERS LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$4.10 million or 31.72% 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.
  • The gross profit margin for NORDIC AMERICAN TANKERS LTD is currently extremely low, coming in at 8.94%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, NAT's net profit margin of -30.48% significantly underperformed when compared to the industry average.
  • In its most recent trading session, NAT 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.
  • NORDIC AMERICAN TANKERS LTD has improved earnings per share by 34.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, NORDIC AMERICAN TANKERS LTD continued to lose money by earning -$1.38 versus -$1.53 in the prior year. For the next year, the market is expecting a contraction of 11.6% in earnings (-$1.54 versus -$1.38).

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: 8.40%

Student Transportation (NASDAQ: STB) shares currently have a dividend yield of 8.40%.

Student Transportation Inc. provides school bus transportation services in North America. The company operates through two segments Transportation, and Oil and Gas. The Transportation segment provides school bus management services to public and private schools in North America. The company has a P/E ratio of 157.25.

The average volume for Student Transportation has been 112,300 shares per day over the past 30 days. Student Transportation has a market cap of $514.1 million and is part of the diversified services industry. Shares are up 2.4% year-to-date as of the close of trading on Tuesday.

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

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 Road & Rail industry. The net income has decreased by 15.5% when compared to the same quarter one year ago, dropping from -$7.61 million to -$8.79 million.
  • 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 Road & Rail industry and the overall market, STUDENT TRANSPORTATION INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$21.11 million or 30.16% 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.
  • The gross profit margin for STUDENT TRANSPORTATION INC is currently extremely low, coming in at 9.36%. Regardless of STB's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, STB's net profit margin of -12.02% significantly underperformed when compared to the industry average.
  • Currently the debt-to-equity ratio of 1.59 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, STB's quick ratio is somewhat strong at 1.05, 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.

Eagle Rock Energy Partners

Dividend Yield: 11.30%

Eagle Rock Energy Partners (NASDAQ: EROC) shares currently have a dividend yield of 11.30%.

Eagle Rock Energy Partners, L.P., together with its subsidiaries, engages in gathering, compressing, treating, processing, transporting, marketing, and trading natural gas, as well as fractionating and transporting natural gas liquids (NGL).

The average volume for Eagle Rock Energy Partners has been 911,300 shares per day over the past 30 days. Eagle Rock Energy Partners has a market cap of $845.8 million and is part of the energy industry. Shares are down 38.7% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Eagle Rock Energy Partners 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, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • Currently the debt-to-equity ratio of 1.57 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, EROC has a quick ratio of 0.66, this demonstrates the lack of ability of the company to cover short-term liquidity 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, EAGLE ROCK ENERGY PARTNRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $47.12 million or 4.28% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, EAGLE ROCK ENERGY PARTNRS LP has marginally lower results.
  • EROC'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 41.74%, 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.
  • EAGLE ROCK ENERGY PARTNRS LP has improved earnings per share by 24.4% 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, EAGLE ROCK ENERGY PARTNRS LP swung to a loss, reporting -$1.11 versus $0.38 in the prior year. This year, the market expects an improvement in earnings (-$0.08 versus -$1.11).

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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