3 Sell-Rated Dividend Stocks: FULL, IRT, NM

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."

Full Circle Capital

Dividend Yield: 12.00%

Full Circle Capital (NASDAQ: FULL) shares currently have a dividend yield of 12.00%.

Full Circle Capital Corporation is a business development company specializing in debt and equity securities of smaller and lower middle-market companies.

The average volume for Full Circle Capital has been 173,400 shares per day over the past 30 days. Full Circle Capital has a market cap of $81.6 million and is part of the financial services industry. Shares are down 22.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Full Circle Capital 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 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 Capital Markets industry. The net income has significantly decreased by 438.8% when compared to the same quarter one year ago, falling from -$1.22 million to -$6.57 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 Capital Markets industry and the overall market, FULL CIRCLE CAPITAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $8.31 million or 54.54% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 54.66%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 243.75% 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.
  • FULL CIRCLE CAPITAL 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, FULL CIRCLE CAPITAL CORP swung to a loss, reporting -$0.83 versus $0.52 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus -$0.83).

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Independence Realty

Dividend Yield: 8.20%

Independence Realty (AMEX: IRT) shares currently have a dividend yield of 8.20%.

Independence Realty Trust, Inc is an equity real estate investment trust launched by RAIT Financial Trust. It is managed by Independence Realty Advisors, LLC. The fund invests in the real estate markets of the United States. It makes investments in apartment properties to create its portfolio.

The average volume for Independence Realty has been 128,500 shares per day over the past 30 days. Independence Realty has a market cap of $281.6 million and is part of the real estate industry. Shares are down 5.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Independence Realty as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, 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, 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 107.9% when compared to the same quarter one year ago, falling from $2.94 million to -$0.23 million.
  • The gross profit margin for INDEPENDENCE REALTY TRUST is rather low; currently it is at 17.42%. Regardless of IRT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, IRT's net profit margin of -1.07% significantly underperformed when compared to the industry average.
  • In its most recent trading session, IRT 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. 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.
  • INDEPENDENCE REALTY TRUST 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, INDEPENDENCE REALTY TRUST increased its bottom line by earning $0.19 versus $0.06 in the prior year. For the next year, the market is expecting a contraction of 126.3% in earnings (-$0.05 versus $0.19).
  • Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, INDEPENDENCE REALTY TRUST's return on equity significantly trails that of both the industry average and the S&P 500.

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Navios Maritime Holdings

Dividend Yield: 7.10%

Navios Maritime Holdings (NYSE: NM) shares currently have a dividend yield of 7.10%.

Navios Maritime Holdings Inc. operates as a seaborne shipping and logistics company. It focuses on the transportation and transshipment of dry bulk commodities, including iron ore, coal, and grains. It operates in two segments, Dry bulk Vessel Operations and Logistics Business.

The average volume for Navios Maritime Holdings has been 793,400 shares per day over the past 30 days. Navios Maritime Holdings has a market cap of $364.0 million and is part of the transportation industry. Shares are down 17.5% year-to-date as of the close of trading on Thursday.

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

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 Marine industry. The net income has significantly decreased by 1399.5% when compared to the same quarter one year ago, falling from $2.05 million to -$26.68 million.
  • The debt-to-equity ratio of 1.28 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • The gross profit margin for NAVIOS MARITIME HOLDINGS INC is currently extremely low, coming in at 14.82%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -22.55% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $10.05 million or 66.00% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 59.24%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 3000.00% 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.

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