What To Sell: 3 Sell-Rated Dividend Stocks BPY, AGNC, PBF

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: 4.70%

Brookfield Property Partners (NYSE: BPY) shares currently have a dividend yield of 4.70%.

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 7.12.

The average volume for Brookfield Property Partners has been 618,800 shares per day over the past 30 days. Brookfield Property Partners has a market cap of $5.2 billion and is part of the real estate industry. Shares are up 7.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Brookfield Property Partners as a sell. The area that we feel has been the company's primary weakness has been its relatively poor performance when compared with the S&P 500 during the past year.

Highlights from the ratings report include:
  • 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.
  • Compared to other companies in the Real Estate Management & Development industry and the overall market, BROOKFIELD PROPERTY PRTRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for BROOKFIELD PROPERTY PRTRS LP is rather high; currently it is at 56.13%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.22% is above that of the industry average.
  • BROOKFIELD PROPERTY PRTRS LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Management & Development industry. The net income increased by 609.4% when compared to the same quarter one year prior, rising from -$53.00 million to $270.00 million.

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American Capital Agency

Dividend Yield: 11.10%

American Capital Agency (NASDAQ: AGNC) shares currently have a dividend yield of 11.10%.

American Capital Agency Corp. operates as a real estate investment trust (REIT).

The average volume for American Capital Agency has been 3,321,700 shares per day over the past 30 days. American Capital Agency has a market cap of $8.3 billion and is part of the real estate industry. Shares are up 21.9% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates American Capital Agency 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, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • AMERICAN CAPITAL AGENCY CORP 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, AMERICAN CAPITAL AGENCY CORP reported lower earnings of $3.17 versus $4.40 in the prior year. For the next year, the market is expecting a contraction of 65.9% in earnings ($1.08 versus $3.17).
  • 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 98.2% when compared to the same quarter one year ago, falling from $1,829.00 million to $33.00 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 Real Estate Investment Trusts (REITs) industry and the overall market, AMERICAN CAPITAL AGENCY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $444.00 million or 10.12% 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.
  • The gross profit margin for AMERICAN CAPITAL AGENCY CORP is currently very high, coming in at 91.15%. Regardless of AGNC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AGNC's net profit margin of 8.10% is significantly lower than 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.

PBF Energy

Dividend Yield: 4.30%

PBF Energy (NYSE: PBF) shares currently have a dividend yield of 4.30%.

PBF Energy Inc., together with its subsidiaries, is engaged in the refining and supply of petroleum products. The company has a P/E ratio of 16.69.

The average volume for PBF Energy has been 1,951,500 shares per day over the past 30 days. PBF Energy has a market cap of $2.4 billion and is part of the energy industry. Shares are down 11.3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates PBF Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins and feeble growth in its earnings per share.

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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PBF ENERGY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The gross profit margin for PBF ENERGY INC is currently extremely low, coming in at 2.93%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.39% trails that of the industry average.
  • PBF ENERGY 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. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PBF ENERGY INC reported lower earnings of $1.35 versus $37.61 in the prior year. This year, the market expects an improvement in earnings ($2.79 versus $1.35).
  • The debt-to-equity ratio is somewhat low, currently at 0.68, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that PBF's debt-to-equity ratio is low, the quick ratio, which is currently 0.55, displays a potential problem in covering short-term cash needs.
  • Compared to its closing price of one year ago, PBF's share price has jumped by 26.64%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in PBF do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

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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