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."

Crossroads Capital

Dividend Yield: 18.00%

Crossroads Capital (NASDAQ: XRDC) shares currently have a dividend yield of 18.00%.

BDC Venture, Inc. is a business development company specializing in later stage, emerging growth, growth capital, secured and unsecured debt, pre-IPO and secondary purchase investments.

The average volume for Crossroads Capital has been 16,000 shares per day over the past 30 days. Crossroads Capital has a market cap of $32.3 million and is part of the financial services industry. Shares are down 31.7% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Crossroads Capital as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, unimpressive growth in net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • CROSSROADS 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 suffered a declining pattern earnings per share over the past two years. During the past fiscal year, CROSSROADS CAPITAL INC swung to a loss, reporting -$0.09 versus $0.26 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 Capital Markets industry. The net income has significantly decreased by 63.7% when compared to the same quarter one year ago, falling from -$3.06 million to -$5.00 million.
  • 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 Capital Markets industry and the overall market, CROSSROADS CAPITAL INC'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 -$1.01 million or 140.60% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much 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 29.15%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 64.51% 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.

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Medley Management

Dividend Yield: 17.30%

Medley Management (NYSE: MDLY) shares currently have a dividend yield of 17.30%.

Medley Management Inc. is an investment holding company and operate and control all of the business and affairs of Medley LLC and its subsidiaries. Medley Management Inc. is based in New York, New York. The company has a P/E ratio of 8.11.

The average volume for Medley Management has been 26,400 shares per day over the past 30 days. Medley Management has a market cap of $27.8 million and is part of the financial services industry. Shares are down 67.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Medley Management as a sell. Among the areas we feel are negative, one of the most important has been unimpressive growth in net income over time.

Highlights from the ratings report include:
  • The change in net income from the same quarter one year ago has exceeded that of the Capital Markets industry average, but is less than that of the S&P 500. The net income has significantly decreased by 28.0% when compared to the same quarter one year ago, falling from $0.38 million to $0.27 million.
  • MDLY, with its decline in revenue, underperformed when compared the industry average of 5.7%. Since the same quarter one year prior, revenues fell by 23.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • MEDLEY MANAGEMENT INC's earnings per share declined by 20.0% in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($0.67 versus $0.24).
  • Looking at the price performance of MDLY's shares over the past 12 months, there is not much good news to report: the stock is down 70.30%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter.
  • The gross profit margin for MEDLEY MANAGEMENT INC is currently very high, coming in at 73.49%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, MDLY's net profit margin of 1.72% significantly trails the industry average.

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Altisource Residential

Dividend Yield: 18.40%

Altisource Residential (NYSE: RESI) shares currently have a dividend yield of 18.40%.

Altisource Residential Corporation, through its subsidiary, Altisource Residential, L.P., focuses on acquiring, owning, and managing single-family rental properties in the United States. The company has a P/E ratio of 11.16.

The average volume for Altisource Residential has been 457,900 shares per day over the past 30 days. Altisource Residential has a market cap of $668.5 million and is part of the real estate industry. Shares are down 37% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Altisource Residential 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, 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 114.2% when compared to the same quarter one year ago, falling from $37.68 million to -$5.36 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, ALTISOURCE RESIDENTIAL CORP's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for ALTISOURCE RESIDENTIAL CORP is currently extremely low, coming in at 12.96%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -9.16% is significantly below that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 38.43%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 113.63% 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.
  • ALTISOURCE RESIDENTIAL 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, ALTISOURCE RESIDENTIAL CORP increased its bottom line by earning $3.33 versus $1.16 in the prior year. For the next year, the market is expecting a contraction of 77.5% in earnings ($0.75 versus $3.33).

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