3 Sell-Rated Dividend Stocks: BGC, MVC, JMI

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."

General Cable

Dividend Yield: 8.90%

General Cable (NYSE: BGC) shares currently have a dividend yield of 8.90%.

General Cable Corporation designs, develops, manufactures, markets, and distributes copper, aluminum, and fiber optic wire and cable products for the energy, industrial, construction, and specialty and communications markets worldwide.

The average volume for General Cable has been 627,700 shares per day over the past 30 days. General Cable has a market cap of $396.0 million and is part of the industrial industry. Shares are down 36.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates General Cable as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 4.73 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, BGC maintains a poor quick ratio of 0.81, which illustrates the inability to avoid short-term cash problems.
  • The gross profit margin for GENERAL CABLE CORP/DE is currently extremely low, coming in at 6.44%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -5.24% is significantly below that of the industry average.
  • BGC's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 45.97%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Electrical Equipment industry and the overall market, GENERAL CABLE CORP/DE's return on equity significantly trails that of both the industry average and the S&P 500.
  • BGC, with its decline in revenue, underperformed when compared the industry average of 21.0%. Since the same quarter one year prior, revenues fell by 41.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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MVC Capital

Dividend Yield: 7.80%

MVC Capital (NYSE: MVC) shares currently have a dividend yield of 7.80%.

MVC Capital, Inc. The company has a P/E ratio of 28.75.

The average volume for MVC Capital has been 57,300 shares per day over the past 30 days. MVC Capital has a market cap of $156.6 million and is part of the financial services industry. Shares are down 6.7% year-to-date as of the close of trading on Friday.

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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.
  • Net operating cash flow has significantly decreased to $11.38 million or 89.73% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much 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 29.81%, 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.

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JAVELIN Mortgage Investment

Dividend Yield: 19.20%

JAVELIN Mortgage Investment (NYSE: JMI) shares currently have a dividend yield of 19.20%.

JAVELIN Mortgage Investment Corp., a real estate investment trust (REIT), invests primarily in fixed rate agency, and fixed rate and hybrid adjustable rate non-agency residential mortgage-backed securities in the United States. The company qualifies as a REIT for federal income tax purposes.

The average volume for JAVELIN Mortgage Investment has been 75,200 shares per day over the past 30 days. JAVELIN Mortgage Investment has a market cap of $67.1 million and is part of the real estate industry. Shares are down 7.7% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates JAVELIN Mortgage Investment 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 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 351.5% when compared to the same quarter one year ago, falling from $6.57 million to -$16.53 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 39.07%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 352.72% 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 decreased to $6.79 million or 14.01% when compared to the same quarter last year. Despite a decrease in cash flow of 14.01%, JAVELIN MORTGAGE INVESTMENT is still significantly exceeding the industry average of -69.51%.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, JAVELIN MORTGAGE INVESTMENT's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for JAVELIN MORTGAGE INVESTMENT is currently very high, coming in at 72.52%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, JMI's net profit margin of -247.27% significantly underperformed when compared to the industry average.

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