What To Sell: 3 Sell-Rated Dividend Stocks CYS, ENLK, CPG

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."

CYS Investments

Dividend Yield: 13.50%

CYS Investments (NYSE: CYS) shares currently have a dividend yield of 13.50%.

CYS Investments, Inc., a specialty finance company, makes leveraged investments in whole-pool residential mortgage pass-through securities where the principal and interest payments are guaranteed.

The average volume for CYS Investments has been 1,774,900 shares per day over the past 30 days. CYS Investments has a market cap of $1.2 billion and is part of the real estate industry. Shares are up 10% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates CYS Investments 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 98.5% when compared to the same quarter one year ago, falling from $111.56 million to $1.65 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, CYS INVESTMENTS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of CYS INVESTMENTS INC has not done very well: it is down 15.07% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when 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.
  • CYS INVESTMENTS 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, CYS INVESTMENTS INC swung to a loss, reporting -$0.17 versus $2.51 in the prior year. This year, the market expects an improvement in earnings ($1.05 versus -$0.17).
  • The gross profit margin for CYS INVESTMENTS INC is currently very high, coming in at 96.21%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CYS's net profit margin of 1.91% significantly trails the industry average.

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EnLink Midstream Partners

Dividend Yield: 18.50%

EnLink Midstream Partners (NYSE: ENLK) shares currently have a dividend yield of 18.50%.

Enlink Midstream Partners, LP, through its subsidiary, EnLink Midstream Operating, LP, provides midstream energy services.

The average volume for EnLink Midstream Partners has been 1,299,800 shares per day over the past 30 days. EnLink Midstream Partners has a market cap of $2.8 billion and is part of the energy industry. Shares are down 48.8% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates EnLink Midstream Partners as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 1483.7% when compared to the same quarter one year ago, falling from $51.60 million to -$714.00 million.
  • The gross profit margin for ENLINK MIDSTREAM PARTNERS LP is rather low; currently it is at 18.87%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -66.94% 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 71.00%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1133.33% 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.
  • ENLINK MIDSTREAM 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, ENLINK MIDSTREAM PARTNERS LP swung to a loss, reporting -$4.29 versus $0.59 in the prior year. This year, the market expects an improvement in earnings ($0.38 versus -$4.29).
  • The revenue growth greatly exceeded the industry average of 32.6%. Since the same quarter one year prior, revenues slightly increased by 7.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.

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Crescent Point Energy

Dividend Yield: 7.30%

Crescent Point Energy (NYSE: CPG) shares currently have a dividend yield of 7.30%.

Crescent Point Energy Corp. acquires, explores, develops, and produces oil and natural gas properties in Western Canada and the United States.

The average volume for Crescent Point Energy has been 1,176,000 shares per day over the past 30 days. Crescent Point Energy has a market cap of $6.0 billion and is part of the energy industry. Shares are up 1.8% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Crescent Point Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 178.0% when compared to the same quarter one year ago, falling from $258.06 million to -$201.37 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 Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, CRESCENT POINT ENERGY CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Despite currently having a low debt-to-equity ratio of 0.42, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that CPG's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.51 is low and demonstrates weak liquidity.
  • Net operating cash flow has declined marginally to $547.19 million or 6.15% when compared to the same quarter last year. Despite a decrease in cash flow CRESCENT POINT ENERGY CORP is still fairing well by exceeding its industry average cash flow growth rate of -39.19%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 54.88%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 166.66% 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.

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