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."

Abengoa Yield

Dividend Yield: 6.70%

Abengoa Yield (NASDAQ: ABY) shares currently have a dividend yield of 6.70%.

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 795,400 shares per day over the past 30 days. Abengoa Yield has a market cap of $2.4 billion and is part of the utilities industry. Shares are down 17.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Abengoa Yield as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and generally high debt management risk.

Highlights from the ratings report include:
  • 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 35.32%, 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.
  • The debt-to-equity ratio is very high at 2.46 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 1.72, 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.
  • The gross profit margin for ABENGOA YIELD PLC is currently very high, coming in at 73.54%. 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 6.65% trails the industry average.
  • Net operating cash flow has significantly increased by 160.74% to $41.93 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 18.10%.

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Marathon Oil

Dividend Yield: 4.70%

Marathon Oil (NYSE: MRO) shares currently have a dividend yield of 4.70%.

Marathon Oil Corporation operates as an energy company. It operates in three segments: North America Exploration and Production, International Exploration and Production, and Oil Sands Mining.

The average volume for Marathon Oil has been 8,136,100 shares per day over the past 30 days. Marathon Oil has a market cap of $12.2 billion and is part of the energy industry. Shares are down 38.5% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Marathon Oil 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 171.5% when compared to the same quarter one year ago, falling from $540.00 million to -$386.00 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MARATHON OIL 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 $408.00 million or 62.50% 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.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 53.98%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 207.54% 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.
  • MARATHON OIL 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. 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, MARATHON OIL CORP increased its bottom line by earning $1.41 versus $1.32 in the prior year. For the next year, the market is expecting a contraction of 178.4% in earnings (-$1.11 versus $1.41).

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Invesco Mortgage Capital

Dividend Yield: 13.10%

Invesco Mortgage Capital (NYSE: IVR) shares currently have a dividend yield of 13.10%.

Invesco Mortgage Capital Inc., a real estate investment trust, focuses on investing in, financing, and managing residential and commercial mortgage-backed securities and mortgage loans. It invests in residential mortgage-backed securities for which a U.S.

The average volume for Invesco Mortgage Capital has been 1,160,600 shares per day over the past 30 days. Invesco Mortgage Capital has a market cap of $1.7 billion and is part of the real estate industry. Shares are down 10.8% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Invesco Mortgage Capital as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

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 Real Estate Investment Trusts (REITs) industry and the overall market, INVESCO MORTGAGE CAPITAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $87.42 million or 1.82% 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.
  • IVR has underperformed the S&P 500 Index, declining 20.87% from its price level of one year ago. 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.
  • INVESCO MORTGAGE CAPITAL INC 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, INVESCO MORTGAGE CAPITAL INC swung to a loss, reporting -$1.75 versus $0.90 in the prior year. This year, the market expects an improvement in earnings ($1.93 versus -$1.75).
  • The gross profit margin for INVESCO MORTGAGE CAPITAL INC is currently very high, coming in at 92.63%. 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 -15.03% is in-line with the industry average.

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