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."

Independence Realty

Dividend Yield: 9.40%

Independence Realty (AMEX: IRT) shares currently have a dividend yield of 9.40%.

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 188,800 shares per day over the past 30 days. Independence Realty has a market cap of $244.5 million and is part of the real estate industry. Shares are down 17.2% year-to-date as of the close of trading on Friday.

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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 generally disappointing historical performance in the stock itself, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • IRT has underperformed the S&P 500 Index, declining 20.73% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • 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, INDEPENDENCE REALTY TRUST's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for INDEPENDENCE REALTY TRUST is rather low; currently it is at 22.89%. 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 1.47% is significantly lower than the industry average.
  • INDEPENDENCE REALTY 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 year. However, we anticipate underperformance relative to this pattern 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 189.5% in earnings (-$0.17 versus $0.19).
  • 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 363.3% when compared to the same quarter one year prior, rising from -$0.13 million to $0.34 million.

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SunCoke Energy

Dividend Yield: 11.00%

SunCoke Energy (NYSE: SXC) shares currently have a dividend yield of 11.00%.

SunCoke Energy, Inc. operates as an independent producer of coke in the Americas. The company offers metallurgical and thermal coal for use as a raw material in the blast furnace steelmaking process. It also provides coal handling and blending services.

The average volume for SunCoke Energy has been 919,100 shares per day over the past 30 days. SunCoke Energy has a market cap of $356.4 million and is part of the metals & mining industry. Shares are down 72.3% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates SunCoke Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally high debt management risk.

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 Metals & Mining industry. The net income has significantly decreased by 552.8% when compared to the same quarter one year ago, falling from -$3.60 million to -$23.50 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 Metals & Mining industry and the overall market, SUNCOKE ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for SUNCOKE ENERGY INC is rather low; currently it is at 20.96%. It has decreased from the same quarter the previous year.
  • Net operating cash flow has significantly decreased to $6.40 million or 80.66% 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.
  • The debt-to-equity ratio is very high at 3.56 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, SXC's quick ratio is somewhat strong at 1.14, demonstrating the ability to handle short-term liquidity needs.

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Azure Midstream Partners

Dividend Yield: 16.80%

Azure Midstream Partners (NYSE: AZUR) shares currently have a dividend yield of 16.80%.

Azure Midstream Partners, LP acquires, owns, develops, and operates midstream energy assets in the United States. It operates through two segments, Gathering and Processing, and Logistics. The company has a P/E ratio of 6.58.

The average volume for Azure Midstream Partners has been 106,500 shares per day over the past 30 days. Azure Midstream Partners has a market cap of $112.8 million and is part of the energy industry. Shares are down 53.9% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Azure Midstream Partners 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:
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, AZURE MIDSTREAM PARTNERS LP'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 -$1.47 million or 122.62% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • AZUR'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 55.35%, 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • AZURE MIDSTREAM PARTNERS LP 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, AZURE MIDSTREAM PARTNERS LP increased its bottom line by earning $0.48 versus $0.36 in the prior year. For the next year, the market is expecting a contraction of 37.5% in earnings ($0.30 versus $0.48).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 477.4% when compared to the same quarter one year prior, rising from -$0.45 million to $1.70 million.

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