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."

Atlas Resource Partners

Dividend Yield: 20.00%

Atlas Resource Partners (NYSE: ARP) shares currently have a dividend yield of 20.00%.

Atlas Resource Partners, L.P. operates as an independent developer and producer of natural gas, crude oil, and natural gas liquids in the United States. The company operates in three segments: Gas and Oil Production, Well Construction and Completion, and Other Partnership Management.

The average volume for Atlas Resource Partners has been 1,250,800 shares per day over the past 30 days. Atlas Resource Partners has a market cap of $76.6 million and is part of the energy industry. Shares are down 29.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Atlas Resource Partners 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 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 29853.5% when compared to the same quarter one year ago, falling from $1.89 million to -$560.85 million.
  • The debt-to-equity ratio is very high at 6.15 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.50, which clearly demonstrates the inability to cover short-term cash needs.
  • 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, ATLAS RESOURCE PARTNERS LP'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 93.61%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 8085.71% 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.
  • ATLAS RESOURCE PARTNERS LP 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, ATLAS RESOURCE PARTNERS LP reported poor results of -$7.76 versus -$1.88 in the prior year. This year, the market expects an improvement in earnings (-$0.08 versus -$7.76).

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Fifth Street Senior Floating Rate

Dividend Yield: 12.50%

Fifth Street Senior Floating Rate (NASDAQ: FSFR) shares currently have a dividend yield of 12.50%.

Fifth Street Senior Floating Rate Corp. The company has a P/E ratio of 7.21.

The average volume for Fifth Street Senior Floating Rate has been 189,400 shares per day over the past 30 days. Fifth Street Senior Floating Rate has a market cap of $212.5 million and is part of the financial services industry. Shares are down 14.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Fifth Street Senior Floating Rate as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, 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 Capital Markets industry. The net income has significantly decreased by 305.2% when compared to the same quarter one year ago, falling from $6.48 million to -$13.31 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. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, FIFTH STREET SR FLTG RATE CP 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 37.74%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 304.54% 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.
  • FIFTH STREET SR FLTG RATE CP 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, FIFTH STREET SR FLTG RATE CP reported lower earnings of $0.54 versus $0.97 in the prior year. This year, the market expects an improvement in earnings ($0.95 versus $0.54).
  • The gross profit margin for FIFTH STREET SR FLTG RATE CP is rather high; currently it is at 66.66%. Regardless of FSFR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FSFR's net profit margin of -95.63% significantly underperformed when compared to the industry average.

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MVC Capital

Dividend Yield: 7.70%

MVC Capital (NYSE: MVC) shares currently have a dividend yield of 7.70%.

MVC Capital, Inc. The company has a P/E ratio of 29.12.

The average volume for MVC Capital has been 60,400 shares per day over the past 30 days. MVC Capital has a market cap of $158.7 million and is part of the financial services industry. Shares are down 5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates MVC Capital 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:
  • MVC 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, MVC CAPITAL INC swung to a loss, reporting -$0.88 versus $0.82 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 903.2% when compared to the same quarter one year ago, falling from $1.74 million to -$13.96 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 Capital Markets industry and the overall market, MVC CAPITAL 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 27.06%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 971.42% 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.
  • Net operating cash flow has significantly decreased to $11.38 million or 89.73% when compared to the same quarter last year. Despite a decrease in cash flow of 89.73%, MVC CAPITAL INC is in line with the industry average cash flow growth rate of -98.63%.

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