3 Sell-Rated Dividend Stocks: BPY, WRE, ARCP

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 which could 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."

Brookfield Property Partners

Dividend Yield: 5.10%

Brookfield Property Partners (NYSE: BPY) shares currently have a dividend yield of 5.10%.

Brookfield Property Partners L.P. owns, operates, and invests in commercial properties in North America, Europe, Australia, and Brazil. The company has a P/E ratio of 13.79.

The average volume for Brookfield Property Partners has been 815,000 shares per day over the past 30 days. Brookfield Property Partners has a market cap of $2.0 billion and is part of the real estate industry. Shares are down 3.3% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Brookfield Property Partners as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share and generally high debt management risk.

Highlights from the ratings report include:
  • BROOKFIELD PROPERTY PRTRS LP has experienced 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 debt-to-equity ratio is very high at 4.78 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • Despite the weak revenue results, BPY has significantly outperformed against the industry average of 37.9%. Since the same quarter one year prior, revenues slightly dropped by 6.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The share price of BROOKFIELD PROPERTY PRTRS LP has not done very well: it is down 13.42% 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 net income growth from the same quarter one year ago has exceeded that of the Real Estate Management & Development industry average, but is less than that of the S&P 500. The net income increased by 13.1% when compared to the same quarter one year prior, going from $329.00 million to $372.00 million.

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

Washington REIT

Dividend Yield: 4.90%

Washington REIT (NYSE: WRE) shares currently have a dividend yield of 4.90%.

Washington Real Estate Investment Trust is an equity real estate investment trust (REIT). The company engages in the ownership, operation, and development of real properties. The firm invests in real estate markets of the greater Washington D.C. metro region. The company has a P/E ratio of 16.78.

The average volume for Washington REIT has been 399,600 shares per day over the past 30 days. Washington REIT has a market cap of $1.6 billion and is part of the real estate industry. Shares are up 3.8% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Washington REIT as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, 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'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 Real Estate Investment Trusts (REITs) industry and the overall market, WASHINGTON REIT's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for WASHINGTON REIT is rather low; currently it is at 17.82%. It has decreased from the same quarter the previous year. Despite the weak results of the gross profit margin, the net profit margin of 151.89% has significantly outperformed against the industry average.
  • The share price of WASHINGTON REIT has not done very well: it is down 13.32% 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. 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.
  • WASHINGTON REIT has experienced 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, WASHINGTON REIT reported lower earnings of $0.00 versus $0.12 in the prior year. This year, the market expects an increase in earnings to $1.70 from $0.00.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 1339.1% when compared to the same quarter one year prior, rising from $7.27 million to $104.55 million.

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

American Realty Capital Properties

Dividend Yield: 7.70%

American Realty Capital Properties (NASDAQ: ARCP) shares currently have a dividend yield of 7.70%.

American Realty Capital Properties, Inc. owns and acquires single tenant, freestanding commercial real estate that is net leased on a medium-term basis, primarily to investment grade credit rated and other creditworthy tenants. The company principally invests in retail and office properties.

The average volume for American Realty Capital Properties has been 10,093,200 shares per day over the past 30 days. American Realty Capital Properties has a market cap of $10.2 billion and is part of the real estate industry. Shares are up 0.1% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates American Realty Capital Properties 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, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • AMERICAN RLTY CAP PPTY INC has experienced 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, AMERICAN RLTY CAP PPTY INC reported poor results of -$2.36 versus -$0.47 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 980.4% when compared to the same quarter one year ago, falling from -$14.61 million to -$157.83 million.
  • Net operating cash flow has significantly decreased to -$29.10 million or 1197.73% 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 share price of AMERICAN RLTY CAP PPTY INC has not done very well: it is down 19.18% 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.
  • 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, AMERICAN RLTY CAP PPTY INC's return on equity significantly trails 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.

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