3 Sell-Rated Dividend Stocks: VET, TGA, CELP

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."

Vermilion Energy

Dividend Yield: 7.10%

Vermilion Energy (NYSE: VET) shares currently have a dividend yield of 7.10%.

Vermilion Energy Inc. acquires, explores, develops, and produces oil and natural gas in North America, Europe and Australia.

The average volume for Vermilion Energy has been 93,600 shares per day over the past 30 days. Vermilion Energy has a market cap of $2.8 billion and is part of the energy industry. Shares are down 1.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Vermilion Energy 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 high debt management risk.

Highlights from the ratings report include:
  • VERMILION ENERGY 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, VERMILION ENERGY INC reported lower earnings of $2.53 versus $3.19 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 254.6% when compared to the same quarter one year ago, falling from $53.90 million to -$83.31 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 Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, VERMILION ENERGY INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Net operating cash flow has decreased to $122.23 million or 47.98% 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 36.71%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 252.00% 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.

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TransGlobe Energy

Dividend Yield: 8.20%

TransGlobe Energy (NASDAQ: TGA) shares currently have a dividend yield of 8.20%.

TransGlobe Energy Corporation acquires, explores, develops, and produces oil and gas properties in the Arab Republic of Egypt.

The average volume for TransGlobe Energy has been 224,100 shares per day over the past 30 days. TransGlobe Energy has a market cap of $88.1 million and is part of the energy industry. Shares are down 28.9% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates TransGlobe Energy 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 and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • TRANSGLOBE ENERGY 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, TRANSGLOBE ENERGY CORP swung to a loss, reporting -$0.02 versus $0.57 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 343.0% when compared to the same quarter one year ago, falling from $19.16 million to -$46.57 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 Oil, Gas & Consumable Fuels industry and the overall market, TRANSGLOBE ENERGY 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 48.38%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 477.77% 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.
  • Along with the very weak revenue results, TGA underperformed when compared to the industry average of 36.8%. Since the same quarter one year prior, revenues plummeted by 63.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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Cypress Energy Partners

Dividend Yield: 16.30%

Cypress Energy Partners (NYSE: CELP) shares currently have a dividend yield of 16.30%.

Cypress Energy Partners, L.P. provides saltwater disposal (SWD), and other water and environmental services in North America. It operates in two segments: Water and Environmental Services (W&ES), and Pipeline Inspection and Integrity Services (PI&IS).

The average volume for Cypress Energy Partners has been 35,500 shares per day over the past 30 days. Cypress Energy Partners has a market cap of $59.2 million and is part of the energy industry. Shares are up 17.5% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Cypress Energy Partners 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 high debt management risk 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 Commercial Services & Supplies industry. The net income has significantly decreased by 150.9% when compared to the same quarter one year ago, falling from $3.56 million to -$1.81 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 Commercial Services & Supplies industry and the overall market, CYPRESS ENERGY PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CYPRESS ENERGY PARTNERS LP is currently extremely low, coming in at 12.55%. Regardless of CELP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CELP's net profit margin of -1.87% significantly underperformed when compared to the industry average.
  • The debt-to-equity ratio is very high at 4.10 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 4.04, which shows the ability to cover short-term cash needs.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 36.71%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 150.00% 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.

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