3 Sell-Rated Dividend Stocks: DSWL, RAS, PGH

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."

Deswell Industries

Dividend Yield: 9.00%

Deswell Industries (NASDAQ: DSWL) shares currently have a dividend yield of 9.00%.

Deswell Industries, Inc. manufactures and sells injection-molded plastic parts and components; and assembles electronic products for original equipment manufacturers and contract manufacturers.

The average volume for Deswell Industries has been 16,900 shares per day over the past 30 days. Deswell Industries has a market cap of $24.9 million and is part of the consumer non-durables industry. Shares are down 13.3% year-to-date as of the close of trading on Friday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreet Ratings rates Deswell Industries as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins and weak operating cash flow.

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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 7935.7% when compared to the same quarter one year ago, falling from $0.01 million to -$1.10 million.
  • The gross profit margin for DESWELL INDUSTRIES INC is currently extremely low, coming in at 12.22%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -9.73% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$2.30 million or 125.34% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 Electronic Equipment, Instruments & Components industry and the overall market, DESWELL INDUSTRIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • This stock's share value has moved by only 31.12% over the past year. 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.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

Rait Financial

Dividend Yield: 13.00%

Rait Financial (NYSE: RAS) shares currently have a dividend yield of 13.00%.

RAIT Financial Trust operates as a self-managed and self-advised real estate investment trust (REIT). The company, through its subsidiaries, invests in, manages, and services real estate-related assets with a focus on commercial real estate.

The average volume for Rait Financial has been 806,100 shares per day over the past 30 days. Rait Financial has a market cap of $502.7 million and is part of the real estate industry. Shares are down 27.2% year-to-date as of the close of trading on Monday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreet Ratings rates Rait Financial as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, RAIT FINANCIAL TRUST's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for RAIT FINANCIAL TRUST is rather low; currently it is at 24.43%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 31.32% trails that of the industry average.
  • RAS'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 31.73%, 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.
  • RAIT FINANCIAL TRUST reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, RAIT FINANCIAL TRUST continued to lose money by earning -$3.88 versus -$4.58 in the prior year. This year, the market expects an improvement in earnings ($0.02 versus -$3.88).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 249.0% when compared to the same quarter one year prior, rising from -$18.24 million to $27.18 million.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

Pengrowth Energy

Dividend Yield: 16.30%

Pengrowth Energy (NYSE: PGH) shares currently have a dividend yield of 16.30%.

Pengrowth Energy Corporation engages in the acquisition, development, exploration, and production of oil and natural gas assets in the Alberta, British Columbia, Saskatchewan, and Nova Scotia provinces in Canada.

The average volume for Pengrowth Energy has been 1,829,400 shares per day over the past 30 days. Pengrowth Energy has a market cap of $605.6 million and is part of the energy industry. Shares are down 66.2% year-to-date as of the close of trading on Monday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreet Ratings rates Pengrowth Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • PENGROWTH ENERGY 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. During the past fiscal year, PENGROWTH ENERGY CORP reported poor results of -$1.09 versus -$0.61 in the prior year.
  • 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 1427.3% when compared to the same quarter one year ago, falling from -$8.80 million to -$134.40 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 Oil, Gas & Consumable Fuels industry and the overall market, PENGROWTH ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for PENGROWTH ENERGY CORP is rather low; currently it is at 15.47%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -94.05% is significantly below that of the industry average.
  • Net operating cash flow has decreased to $97.50 million or 10.87% when compared to the same quarter last year. Despite a decrease in cash flow of 10.87%, PENGROWTH ENERGY CORP is in line with the industry average cash flow growth rate of -19.88%.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

Other helpful dividend tools from TheStreet:

More from Markets

Dow Ends Off 125 Points as Caterpillar, 3M Earnings Disappoint

Dow Ends Off 125 Points as Caterpillar, 3M Earnings Disappoint

Multiple Tailwinds Take Shape That Could Drive BP Gains

Multiple Tailwinds Take Shape That Could Drive BP Gains

Tesla Critic Citron Research Changes Its Mind, Goes Long on the EV Maker

Tesla Critic Citron Research Changes Its Mind, Goes Long on the EV Maker

Verizon Beats Q3 Earnings Estimate, Postpaid Phone Additions Top Forecasts

Verizon Beats Q3 Earnings Estimate, Postpaid Phone Additions Top Forecasts

Philip Morris Rolls Out New Smokeless Cigs to Fire Up Sales

Philip Morris Rolls Out New Smokeless Cigs to Fire Up Sales