What To Sell: 3 Sell-Rated Dividend Stocks MTGE, CBL, IVR

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."

American Capital Mortgage Investment

Dividend Yield: 11.80%

American Capital Mortgage Investment (NASDAQ: MTGE) shares currently have a dividend yield of 11.80%.

American Capital Mortgage Investment Corp. operates as a real estate investment trust (REIT) in the United States.

The average volume for American Capital Mortgage Investment has been 620,700 shares per day over the past 30 days. American Capital Mortgage Investment has a market cap of $677.1 million and is part of the real estate industry. Shares are down 2.8% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates American Capital Mortgage Investment 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 130.6% when compared to the same quarter one year ago, falling from $17.83 million to -$5.45 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 Real Estate Investment Trusts (REITs) industry and the overall market, AMERICAN CAPITAL MTG INV CP'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 26.80%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 139.39% 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.
  • AMERICAN CAPITAL MTG INV 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, AMERICAN CAPITAL MTG INV CP swung to a loss, reporting -$0.84 versus $3.06 in the prior year. This year, the market expects an improvement in earnings ($1.93 versus -$0.84).
  • MTGE, with its very weak revenue results, has greatly underperformed against the industry average of 6.8%. Since the same quarter one year prior, revenues plummeted by 97.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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CBL & Associates Properties

Dividend Yield: 9.90%

CBL & Associates Properties (NYSE: CBL) shares currently have a dividend yield of 9.90%.

CBL & Associates Properties, Inc. is a public real estate investment trust. It engages in acquisition, development, and management of properties. The fund invests in the real estate markets of United States. Its portfolio consists of enclosed malls and open-air centers. The company has a P/E ratio of 31.35.

The average volume for CBL & Associates Properties has been 1,513,300 shares per day over the past 30 days. CBL & Associates Properties has a market cap of $1.8 billion and is part of the real estate industry. Shares are down 13% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates CBL & Associates Properties 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 129.1% when compared to the same quarter one year ago, falling from $76.56 million to -$22.26 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, CBL & ASSOCIATES PPTYS INC's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for CBL & ASSOCIATES PPTYS INC is currently extremely low, coming in at 10.77%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -7.84% 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 49.59%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 152.63% 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.
  • CBL & ASSOCIATES PPTYS 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 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, CBL & ASSOCIATES PPTYS INC reported lower earnings of $0.34 versus $1.02 in the prior year. This year, the market expects an improvement in earnings ($0.67 versus $0.34).

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Invesco Mortgage Capital

Dividend Yield: 14.70%

Invesco Mortgage Capital (NYSE: IVR) shares currently have a dividend yield of 14.70%.

Invesco Mortgage Capital Inc., a real estate investment trust, focuses on investing in, financing, and managing residential and commercial mortgage-backed securities and mortgage loans. It invests in residential mortgage-backed securities for which a U.S. The company has a P/E ratio of 16.24.

The average volume for Invesco Mortgage Capital has been 1,336,400 shares per day over the past 30 days. Invesco Mortgage Capital has a market cap of $1.2 billion and is part of the real estate industry. Shares are down 11.5% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Invesco Mortgage Capital as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow, 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 25905.6% when compared to the same quarter one year ago, falling from $0.54 million to -$138.83 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 32.67%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 5800.00% 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.
  • Net operating cash flow has declined marginally to $88.58 million or 3.36% when compared to the same quarter last year. Despite a decrease in cash flow of 3.36%, INVESCO MORTGAGE CAPITAL INC is still significantly exceeding the industry average of -73.46%.
  • INVESCO MORTGAGE 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 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, INVESCO MORTGAGE CAPITAL INC swung to a loss, reporting -$1.98 versus $1.00 in the prior year. This year, the market expects an improvement in earnings ($1.72 versus -$1.98).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, INVESCO MORTGAGE CAPITAL INC's return on equity significantly trails that of both the industry average and the S&P 500.

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