3 Sell-Rated Dividend Stocks: GNI, TEU, UAN

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

Great Northern Iron Ore

Dividend Yield: 14.50%

Great Northern Iron Ore (NYSE: GNI) shares currently have a dividend yield of 14.50%.

Great Northern Iron Ore Properties, a conventional nonvoting trust, owns and leases mineral and non-mineral properties on the Mesabi Iron Range in northeastern Minnesota. The company has a P/E ratio of 7.49.

The average volume for Great Northern Iron Ore has been 10,300 shares per day over the past 30 days. Great Northern Iron Ore has a market cap of $109.9 million and is part of the metals & mining industry. Shares are up 9% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Great Northern Iron Ore 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 and weak operating cash flow.

Highlights from the ratings report include:
  • GREAT NORTHERN IRON ORE PPTY's earnings per share declined by 20.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, GREAT NORTHERN IRON ORE PPTY reported lower earnings of $13.38 versus $15.37 in the prior year.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Metals & Mining industry. The net income has decreased by 20.2% when compared to the same quarter one year ago, dropping from $4.27 million to $3.40 million.
  • Net operating cash flow has decreased to $3.19 million or 47.12% 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.
  • In its most recent trading session, GNI 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. 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.
  • 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 Metals & Mining industry and the overall market, GREAT NORTHERN IRON ORE PPTY's return on equity significantly exceeds that of both the industry average and 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.

Box Ships

Dividend Yield: 7.90%

Box Ships (NYSE: TEU) shares currently have a dividend yield of 7.90%.

Box Ships Inc., a shipping company, engages in the seaborne transportation of containers worldwide. As of December 31, 2012, it had a fleet of 9 containerships with a total capacity of approximately 43,925 twenty-foot equivalent units. The company has a P/E ratio of 6.45.

The average volume for Box Ships has been 194,900 shares per day over the past 30 days. Box Ships has a market cap of $75.6 million and is part of the transportation industry. Shares are down 26.1% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Box Ships 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:
  • 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. When compared to other companies in the Marine industry and the overall market, BOX SHIPS INC's return on equity is below that of both the industry average and the S&P 500.
  • TEU'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 35.21%, 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.
  • TEU's debt-to-equity ratio of 0.81 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. Despite the fact that TEU's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.51 is low and demonstrates weak liquidity.
  • BOX SHIPS INC has improved earnings per share by 42.9% 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, BOX SHIPS INC reported lower earnings of $0.58 versus $0.80 in the prior year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Marine industry average. The net income increased by 32.5% when compared to the same quarter one year prior, rising from $3.66 million to $4.84 million.

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

CVR Partners

Dividend Yield: 14.20%

CVR Partners (NYSE: UAN) shares currently have a dividend yield of 14.20%.

CVR Partners, LP engages in the production, distribution, and marketing of nitrogen fertilizers in North America. Its nitrogen fertilizer products include ammonia and urea ammonium nitrate. CVR GP, LLC serves as the general partner of the company. The company has a P/E ratio of 11.30.

The average volume for CVR Partners has been 331,700 shares per day over the past 30 days. CVR Partners has a market cap of $1.2 billion and is part of the chemicals industry. Shares are down 35.1% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates CVR Partners as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow, 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 37.5% when compared to the same quarter one year ago, falling from $31.56 million to $19.71 million.
  • Net operating cash flow has significantly decreased to $21.90 million or 51.25% 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.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 39.15%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 37.20% 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.
  • CVR PARTNERS LP's earnings per share declined by 37.2% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CVR PARTNERS LP reported lower earnings of $1.53 versus $1.81 in the prior year. This year, the market expects an improvement in earnings ($1.55 versus $1.53).
  • 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. When compared to other companies in the Chemicals industry and the overall market, CVR PARTNERS LP's return on equity exceeds that of the industry average and significantly exceeds 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.

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