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."

Full Circle Capital

Dividend Yield: 17.90%

Full Circle Capital (NASDAQ: FULL) shares currently have a dividend yield of 17.90%.

Full Circle Capital Corporation is a business development company specializing in debt and equity securities of smaller and lower middle-market companies.

The average volume for Full Circle Capital has been 71,200 shares per day over the past 30 days. Full Circle Capital has a market cap of $52.8 million and is part of the financial services industry. Shares are down 4.5% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Full Circle Capital as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity 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 significantly underperformed when compared to that of the S&P 500 and the Capital Markets industry. The net income has significantly decreased by 2243.2% when compared to the same quarter one year ago, falling from $0.23 million to -$4.91 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, FULL CIRCLE CAPITAL CORP'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 48.26%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1150.00% 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.
  • FULL, with its very weak revenue results, has greatly underperformed against the industry average of 0.3%. Since the same quarter one year prior, revenues plummeted by 204.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • FULL CIRCLE CAPITAL 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FULL CIRCLE CAPITAL CORP continued to lose money by earning -$0.41 versus -$0.83 in the prior year. This year, the market expects an improvement in earnings ($0.42 versus -$0.41).

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City Office REIT

Dividend Yield: 8.20%

City Office REIT (NYSE: CIO) shares currently have a dividend yield of 8.20%.

City Office REIT, Inc is an equity real estate investment trust. The fund invests in the real estate markets of the United States. It acquires, own and operate high-quality office properties. City Office REIT, Inc was formed in November 26, 2013 and is domiciled in the United States.

The average volume for City Office REIT has been 33,100 shares per day over the past 30 days. City Office REIT has a market cap of $144.3 million and is part of the real estate industry. Shares are down 5.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates City Office REIT as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, poor profit margins 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 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 41.4% when compared to the same quarter one year ago, falling from -$1.77 million to -$2.50 million.
  • The gross profit margin for CITY OFFICE REIT INC is rather low; currently it is at 19.73%. Regardless of CIO's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CIO's net profit margin of -17.09% significantly underperformed when compared to the industry average.
  • CIO is off 10.19% from its price level of one year ago, reflecting the general market trend and ignoring their higher earnings per share 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.
  • Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CITY OFFICE REIT INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 122.34% to $6.89 million when compared to the same quarter last year. In addition, CITY OFFICE REIT INC has also vastly surpassed the industry average cash flow growth rate of 7.99%.

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American Capital Senior Floating

Dividend Yield: 13.40%

American Capital Senior Floating (NASDAQ: ACSF) shares currently have a dividend yield of 13.40%.

American Capital Senior Floating, Ltd. is a close ended fixed income mutual fund launched by American Capital Asset Management, LLC. The fund is managed by American Capital ACSF Management, LLC. It invests in fixed income markets of the United States.

The average volume for American Capital Senior Floating has been 45,500 shares per day over the past 30 days. American Capital Senior Floating has a market cap of $86.8 million and is part of the financial services industry. Shares are down 10.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates American Capital Senior Floating 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 and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • AMERICAN CAPITAL SR FLTG LTD 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 21.6% in earnings ($0.29 versus $0.37).
  • 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 3026.0% when compared to the same quarter one year ago, falling from $0.25 million to -$7.20 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 31.32%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 3700.00% 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.
  • Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, AMERICAN CAPITAL SR FLTG LTD underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for AMERICAN CAPITAL SR FLTG LTD is currently very high, coming in at 83.08%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -144.33% is in-line with the industry average.

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