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."

American Capital Agency

Dividend Yield: 12.10%

American Capital Agency (NASDAQ: AGNC) shares currently have a dividend yield of 12.10%.

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

The average volume for American Capital Agency has been 3,602,400 shares per day over the past 30 days. American Capital Agency has a market cap of $7.6 billion and is part of the real estate industry. Shares are up 12.6% year-to-date as of the close of trading on Monday.

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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, weak operating cash flow and generally disappointing historical performance in the stock itself.

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 66.2% in earnings ($1.07 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 share price of AMERICAN CAPITAL AGENCY CORP has not done very well: it is down 6.83% 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.

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Cliffs Natural Resources

Dividend Yield: 7.20%

Cliffs Natural Resources (NYSE: CLF) shares currently have a dividend yield of 7.20%.

Cliffs Natural Resources Inc., a mining and natural resources company, produces iron ore and metallurgical coal. The company has a P/E ratio of 48.32.

The average volume for Cliffs Natural Resources has been 7,575,900 shares per day over the past 30 days. Cliffs Natural Resources has a market cap of $1.3 billion and is part of the metals & mining industry. Shares are down 68.5% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Cliffs Natural Resources as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, unimpressive growth in net income, poor profit margins, weak operating cash flow and generally high debt management risk.

Highlights from the ratings report include:
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 53.38%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 101.21% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies 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 Metals & Mining industry. The net income has significantly decreased by 92.5% when compared to the same quarter one year ago, falling from $146.00 million to $10.90 million.
  • The gross profit margin for CLIFFS NATURAL RESOURCES INC is rather low; currently it is at 21.56%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.99% significantly trails the industry average.
  • Net operating cash flow has significantly decreased to -$41.90 million or 110.11% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • CLF's debt-to-equity ratio of 0.61 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 CLF's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.57 is low and demonstrates weak liquidity.

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Pan American Silver

Dividend Yield: 4.90%

Pan American Silver (NASDAQ: PAAS) shares currently have a dividend yield of 4.90%.

Pan American Silver Corp., together with its subsidiaries, operates and develops, and explores for silver producing properties and assets in Mexico, Peru, Argentina, and Bolivia. The company also produces and sells gold, zinc, lead, and copper.

The average volume for Pan American Silver has been 1,195,400 shares per day over the past 30 days. Pan American Silver has a market cap of $1.6 billion and is part of the metals & mining industry. Shares are down 11.3% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Pan American Silver as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and poor profit margins.

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 Metals & Mining industry and the overall market, PAN AMERICAN SILVER CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for PAN AMERICAN SILVER CORP is rather low; currently it is at 24.17%. Regardless of PAAS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, PAAS's net profit margin of -2.72% significantly underperformed when compared to the industry average.
  • In its most recent trading session, PAAS 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.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Metals & Mining industry average, but is greater than that of the S&P 500. The net income increased by 97.1% when compared to the same quarter one year prior, rising from -$186.54 million to -$5.47 million.
  • PAN AMERICAN SILVER CORP reported significant earnings per share improvement 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, PAN AMERICAN SILVER CORP swung to a loss, reporting -$2.98 versus $0.57 in the prior year. This year, the market expects an improvement in earnings ($0.20 versus -$2.98).

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