3 Sell-Rated Dividend Stocks: ARP, WILN, CVRR

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

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."

Atlas Resource Partners

Dividend Yield: 14.10%

Atlas Resource Partners (NYSE: ARP) shares currently have a dividend yield of 14.10%.

Atlas Resource Partners, L.P. operates as an independent developer and producer of natural gas, crude oil, and natural gas liquids in the United States. The company operates in three segments: Gas and Oil Production, Well Construction and Completion, and Other Partnership Management.

The average volume for Atlas Resource Partners has been 734,300 shares per day over the past 30 days. Atlas Resource Partners has a market cap of $787.2 million and is part of the energy industry. Shares are down 13.8% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Atlas Resource Partners as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 1352.1% when compared to the same quarter one year ago, falling from -$40.00 million to -$580.75 million.
  • 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. Along with this, the company manages to maintain a quick ratio of 0.47, which clearly demonstrates the inability to cover short-term cash needs.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, ATLAS RESOURCE PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 56.67%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 816.88% 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.
  • ATLAS RESOURCE PARTNERS 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 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, ATLAS RESOURCE PARTNERS LP reported poor results of -$7.79 versus -$1.88 in the prior year. This year, the market expects an improvement in earnings (-$0.70 versus -$7.79).

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Wi-Lan

Dividend Yield: 7.20%

Wi-Lan (NASDAQ: WILN) shares currently have a dividend yield of 7.20%.

Wi-LAN Inc., an intellectual property licensing company, develops, acquires, and licenses various patented technologies, which are used in products in the communications and consumer electronics markets. The company has a P/E ratio of 243.00.

The average volume for Wi-Lan has been 69,300 shares per day over the past 30 days. Wi-Lan has a market cap of $292.2 million and is part of the telecommunications industry. Shares are down 18.7% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Wi-Lan 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 and weak operating cash flow.

Highlights from the ratings report include:
  • The share price of WI-LAN INC has not done very well: it is down 20.97% 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. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others 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 Communications Equipment industry. The net income has significantly decreased by 219.9% when compared to the same quarter one year ago, falling from $3.97 million to -$4.76 million.
  • The gross profit margin for WI-LAN INC is currently extremely low, coming in at 4.63%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -23.31% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $2.36 million or 88.96% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, WI-LAN INC has marginally lower results.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Communications Equipment industry and the overall market on the basis of return on equity, WI-LAN INC underperformed against that of the industry average and is significantly less than that of the S&P 500.

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CVR Refining

Dividend Yield: 13.70%

CVR Refining (NYSE: CVRR) shares currently have a dividend yield of 13.70%.

CVR Refining, LP operates as an independent petroleum refiner and marketer of transportation fuels in the United States. It owns and operates a complex full coking medium-sour crude oil refinery in Coffeyville, Kansas. The company has a P/E ratio of 23.32.

The average volume for CVR Refining has been 375,700 shares per day over the past 30 days. CVR Refining has a market cap of $3.3 billion and is part of the energy industry. Shares are up 31.9% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates CVR Refining 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, generally disappointing historical performance in the stock itself and poor profit margins.

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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 82.4% when compared to the same quarter one year ago, falling from $265.40 million to $46.70 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CVR REFINING LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has decreased to $148.50 million or 42.48% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, CVR REFINING LP has marginally lower results.
  • The share price of CVR REFINING LP has not done very well: it is down 9.99% 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 gross profit margin for CVR REFINING LP is currently extremely low, coming in at 12.37%. Regardless of CVRR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.58% trails the industry average.

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