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."

Enbridge

Dividend Yield: 5.10%

Enbridge (NYSE: ENB) shares currently have a dividend yield of 5.10%.

Enbridge Inc. operates as an energy transportation and distribution company in the United States and Canada. Its Liquids Pipelines segment operates common carrier and contract crude oil, natural gas liquids (NGL), and refined products pipelines and terminals. The company has a P/E ratio of 206.80.

The average volume for Enbridge has been 1,449,700 shares per day over the past 30 days. Enbridge has a market cap of $26.8 billion and is part of the energy industry. Shares are down 40% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Enbridge as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, generally disappointing historical performance in the stock itself and poor profit margins.

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 3735.7% when compared to the same quarter one year ago, falling from -$14.00 million to -$537.00 million.
  • The debt-to-equity ratio is very high at 2.26 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • 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 on the basis of return on equity, ENBRIDGE INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 28.24%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 620.00% compared to the year-earlier 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.
  • The gross profit margin for ENBRIDGE INC is currently extremely low, coming in at 10.19%. Regardless of ENB's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -6.45% trails the industry average.

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Invesco Mortgage Capital

Dividend Yield: 12.50%

Invesco Mortgage Capital (NYSE: IVR) shares currently have a dividend yield of 12.50%.

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 1,458,700 shares per day over the past 30 days. Invesco Mortgage Capital has a market cap of $1.5 billion and is part of the real estate industry. Shares are down 17.1% year-to-date as of the close of trading on Tuesday.

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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 unimpressive growth in net income, 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 25905.6% when compared to the same quarter one year ago, falling from $0.54 million to -$138.83 million.
  • Net operating cash flow has declined marginally to $88.58 million or 3.36% 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 share price of INVESCO MORTGAGE CAPITAL INC has not done very well: it is down 21.18% 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.
  • INVESCO MORTGAGE CAPITAL 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. 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, INVESCO MORTGAGE CAPITAL INC swung to a loss, reporting -$1.98 versus $1.00 in the prior year. This year, the market expects an improvement in earnings ($1.72 versus -$1.98).
  • 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 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.

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Outfront Media

Dividend Yield: 6.20%

Outfront Media (NYSE: OUT) shares currently have a dividend yield of 6.20%.

OUTFRONT Media Inc. provides advertising space on out-of-home advertising structures and sites in the United States, Canada, and Latin America. The company has a P/E ratio of 42.37.

The average volume for Outfront Media has been 657,800 shares per day over the past 30 days. Outfront Media has a market cap of $3.0 billion and is part of the real estate industry. Shares are down 20.6% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Outfront Media 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, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • OUTFRONT MEDIA 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. For the next year, the market is expecting a contraction of 80.0% in earnings ($0.51 versus $2.55).
  • 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 91.5% when compared to the same quarter one year ago, falling from $248.30 million to $21.20 million.
  • Net operating cash flow has decreased to $102.30 million or 14.53% 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 share price of OUTFRONT MEDIA INC has not done very well: it is down 15.95% 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.
  • 43.63% is the gross profit margin for OUTFRONT MEDIA INC which we consider to be strong. Regardless of OUT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OUT's net profit margin of 5.48% is significantly lower than the industry average.

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