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."

Mosaic

Dividend Yield: 4.40%

Mosaic (NYSE: MOS) shares currently have a dividend yield of 4.40%.

The Mosaic Company produces and markets concentrated phosphate and potash crop nutrients for the agricultural industry worldwide. It operates through two segments, Phosphates and Potash. The Phosphates segment owns and operates mines in Florida. The company has a P/E ratio of 7.57.

The average volume for Mosaic has been 4,981,700 shares per day over the past 30 days. Mosaic has a market cap of $8.4 billion and is part of the chemicals industry. Shares are down 13.7% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Mosaic as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Chemicals industry average. The net income has decreased by 20.8% when compared to the same quarter one year ago, dropping from $201.90 million to $160.00 million.
  • The gross profit margin for MOSAIC CO is rather low; currently it is at 24.62%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 7.59% trails that of the industry average.
  • Net operating cash flow has decreased to $282.10 million or 42.26% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Looking at the price performance of MOS's shares over the past 12 months, there is not much good news to report: the stock is down 44.25%, 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. 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Chemicals industry and the overall market, MOSAIC CO's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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Precision Drilling

Dividend Yield: 6.50%

Precision Drilling (NYSE: PDS) shares currently have a dividend yield of 6.50%.

Precision Drilling Corporation provides oil and natural gas drilling and related services and products. The company operates through two segments, Contract Drilling Services; and Completion and Production Services.

The average volume for Precision Drilling has been 2,488,400 shares per day over the past 30 days. Precision Drilling has a market cap of $960.8 million and is part of the energy industry. Shares are down 19.5% year-to-date as of the close of trading on Monday.

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

Highlights from the ratings report include:
  • PRECISION DRILLING 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, PRECISION DRILLING CORP reported lower earnings of $0.12 versus $0.67 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 Energy Equipment & Services industry. The net income has significantly decreased by 264.2% when compared to the same quarter one year ago, falling from $52.81 million to -$86.70 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 Energy Equipment & Services industry and the overall market, PRECISION DRILLING 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 $61.05 million or 58.39% 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 36.68%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 266.66% 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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Enbridge

Dividend Yield: 4.70%

Enbridge (NYSE: ENB) shares currently have a dividend yield of 4.70%.

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 211.40.

The average volume for Enbridge has been 1,768,900 shares per day over the past 30 days. Enbridge has a market cap of $27.4 billion and is part of the energy industry. Shares are down 6.2% year-to-date as of the close of trading on Monday.

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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, ENBRIDGE INC's return on equity significantly trails that of both the industry average and 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 33.18%, 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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