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."

CYS Investments

Dividend Yield: 15.20%

CYS Investments (NYSE: CYS) shares currently have a dividend yield of 15.20%.

CYS Investments, Inc., a specialty finance company, makes leveraged investments in whole-pool residential mortgage pass-through securities where the principal and interest payments are guaranteed. The company has a P/E ratio of 16.80.

The average volume for CYS Investments has been 1,628,200 shares per day over the past 30 days. CYS Investments has a market cap of $1.2 billion and is part of the real estate industry. Shares are down 13.5% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates CYS Investments as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating 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 161.3% when compared to the same quarter one year ago, falling from $158.38 million to -$97.04 million.
  • 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CYS INVESTMENTS INC's return on equity is below that of both the industry average and the S&P 500.
  • The share price of CYS INVESTMENTS INC has not done very well: it is down 17.31% 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.
  • CYS INVESTMENTS 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. 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, CYS INVESTMENTS INC turned its bottom line around by earning $2.51 versus -$2.87 in the prior year. For the next year, the market is expecting a contraction of 54.2% in earnings ($1.15 versus $2.51).
  • The gross profit margin for CYS INVESTMENTS INC is currently very high, coming in at 92.55%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -120.31% is in-line with the industry average.

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Abengoa Yield

Dividend Yield: 5.00%

Abengoa Yield (NASDAQ: ABY) shares currently have a dividend yield of 5.00%.

Abengoa Yield plc owns a portfolio of renewable energy, conventional power, and electric transmission line contracted assets in North America, South America, and Europe.

The average volume for Abengoa Yield has been 522,300 shares per day over the past 30 days. Abengoa Yield has a market cap of $2.2 billion and is part of the utilities industry. Shares are down 1.5% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Abengoa Yield as a sell. Among the areas we feel are negative, one of the most important has been very high debt management risk by most measures.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 2.48 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, ABY has managed to keep a strong quick ratio of 1.65, which demonstrates the ability to cover short-term cash needs.
  • Compared to other companies in the Independent Power Producers & Energy Traders industry and the overall market on the basis of return on equity, ABENGOA YIELD PLC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • ABY's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 28.61%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter.
  • The gross profit margin for ABENGOA YIELD PLC is rather high; currently it is at 69.74%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -10.67% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 8052.55% to $37.38 million when compared to the same quarter last year. In addition, ABENGOA YIELD PLC has also vastly surpassed the industry average cash flow growth rate of -6.92%.

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Bank of Nova Scotia

Dividend Yield: 4.50%

Bank of Nova Scotia (NYSE: BNS) shares currently have a dividend yield of 4.50%.

The Bank of Nova Scotia provides various personal, commercial, corporate, and investment banking services in Canada and internationally. The company has a P/E ratio of 10.08.

The average volume for Bank of Nova Scotia has been 715,200 shares per day over the past 30 days. Bank of Nova Scotia has a market cap of $57.8 billion and is part of the banking industry. Shares are down 17.9% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Bank of Nova Scotia as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • Net operating cash flow has significantly decreased to -$2,077.00 million or 128.90% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • BNS's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 29.48%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • BANK OF NOVA SCOTIA's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, BANK OF NOVA SCOTIA increased its bottom line by earning $5.66 versus $1.29 in the prior year.
  • The gross profit margin for BANK OF NOVA SCOTIA is currently very high, coming in at 73.25%. Regardless of BNS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 22.96% trails the industry average.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Commercial Banks industry average. The net income increased by 0.9% when compared to the same quarter one year prior, going from $1,742.00 million to $1,757.00 million.

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