3 Sell-Rated Dividend Stocks: OAKS, GOOD, CELP

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."

Five Oaks Investment

Dividend Yield: 14.90%

Five Oaks Investment (NYSE: OAKS) shares currently have a dividend yield of 14.90%.

Five Oaks Investment Corp. focuses on investing, financing, and managing a portfolio of mortgage-backed securities (MBS). It invests in agency and non-agency residential MBS, multi-family MBS, residential mortgage loans, mortgage servicing rights, and other mortgage-related investments.

The average volume for Five Oaks Investment has been 102,000 shares per day over the past 30 days. Five Oaks Investment has a market cap of $148.2 million and is part of the real estate industry. Shares are down 10.1% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Five Oaks Investment as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 133.5% when compared to the same quarter one year ago, falling from $10.74 million to -$3.60 million.
  • 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, FIVE OAKS INVESTMENT CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of FIVE OAKS INVESTMENT CORP has not done very well: it is down 13.95% 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.
  • FIVE OAKS INVESTMENT 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. 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, FIVE OAKS INVESTMENT CORP swung to a loss, reporting -$0.03 versus $0.42 in the prior year. This year, the market expects an improvement in earnings ($1.31 versus -$0.03).
  • The gross profit margin for FIVE OAKS INVESTMENT CORP is currently very high, coming in at 83.59%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -12.36% is in-line with the industry average.

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Gladstone Commercial

Dividend Yield: 8.50%

Gladstone Commercial (NASDAQ: GOOD) shares currently have a dividend yield of 8.50%.

Gladstone Commercial Corporation operates as a real estate investment trust (REIT) in the United States. It engages in investing in and owning net leased industrial and commercial real properties, and making long-term industrial and commercial mortgage loans. The company has a P/E ratio of 60.62.

The average volume for Gladstone Commercial has been 99,400 shares per day over the past 30 days. Gladstone Commercial has a market cap of $364.5 million and is part of the real estate industry. Shares are up 2.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Gladstone Commercial as a sell. Among the areas we feel are negative, one of the most important has been the stock's relatively poor performance when compared with the S&P 500 during the past year.

Highlights from the ratings report include:
  • In its most recent trading session, GOOD 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. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • 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, GLADSTONE COMMERCIAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • GLADSTONE COMMERCIAL CORP reported significant earnings per share improvement 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, GLADSTONE COMMERCIAL CORP reported poor results of -$0.61 versus -$0.22 in the prior year.
  • 40.86% is the gross profit margin for GLADSTONE COMMERCIAL CORP which we consider to be strong. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, GOOD's net profit margin of 3.49% significantly trails the industry average.
  • Net operating cash flow has increased to $8.94 million or 45.08% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 3.10%.

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Cypress Energy Partners

Dividend Yield: 10.40%

Cypress Energy Partners (NYSE: CELP) shares currently have a dividend yield of 10.40%.

Cypress Energy Partners, L.P. provides saltwater disposal (SWD), and other water and environmental services in North America. It operates in two segments: Water and Environmental Services (W&ES), and Pipeline Inspection and Integrity Services (PI&IS).

The average volume for Cypress Energy Partners has been 39,100 shares per day over the past 30 days. Cypress Energy Partners has a market cap of $92.6 million and is part of the energy industry. Shares are up 6.6% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Cypress Energy Partners as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income 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 Commercial Services & Supplies industry. The net income has significantly decreased by 98.1% when compared to the same quarter one year ago, falling from -$15.21 million to -$30.13 million.
  • CYPRESS ENERGY 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CYPRESS ENERGY PARTNERS LP reported poor results of -$1.73 versus -$1.29 in the prior year. This year, the market expects an improvement in earnings ($1.06 versus -$1.73).
  • CELP, with its decline in revenue, underperformed when compared the industry average of 1.4%. Since the same quarter one year prior, revenues fell by 13.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Even though the current debt-to-equity ratio is 1.05, it is still below the industry average, suggesting that this level of debt is acceptable within the Commercial Services & Supplies industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 6.60 is very high and demonstrates very strong liquidity.
  • Compared to other companies in the Commercial Services & Supplies industry and the overall market, CYPRESS ENERGY PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.

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