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."

Quad/Graphics

Dividend Yield: 10.30%

Quad/Graphics (NYSE: QUAD) shares currently have a dividend yield of 10.30%.

Quad/Graphics, Inc., together with its subsidiaries, provides print and media solutions in the United States, Europe, and Latin America.

The average volume for Quad/Graphics has been 386,900 shares per day over the past 30 days. Quad/Graphics has a market cap of $581.1 million and is part of the diversified services industry. Shares are up 31.2% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Quad/Graphics 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, poor profit margins and weak operating cash flow.

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 136.4% when compared to the same quarter one year ago, falling from $25.80 million to -$9.40 million.
  • The debt-to-equity ratio is very high at 3.18 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, QUAD maintains a poor quick ratio of 0.83, which illustrates the inability to avoid short-term cash problems.
  • 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, QUAD/GRAPHICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for QUAD/GRAPHICS INC is rather low; currently it is at 20.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.70% is significantly below that of the industry average.
  • Net operating cash flow has decreased to $168.90 million or 22.66% 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.

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EnLink Midstream

Dividend Yield: 14.10%

EnLink Midstream (NYSE: ENLC) shares currently have a dividend yield of 14.10%.

EnLink Midstream, LLC engages in gathering, transmission, processing, and marketing of natural gas and natural gas liquids (NGLs), condensate, and crude oil in the United States.

The average volume for EnLink Midstream has been 898,500 shares per day over the past 30 days. EnLink Midstream has a market cap of $1.3 billion and is part of the energy industry. Shares are down 47% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates EnLink Midstream 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, poor profit margins 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 763.3% when compared to the same quarter one year ago, falling from $29.40 million to -$195.00 million.
  • The debt-to-equity ratio of 1.35 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.38, 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, ENLINK MIDSTREAM LLC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ENLINK MIDSTREAM LLC is rather low; currently it is at 15.95%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -18.28% 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 79.06%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 755.55% 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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New Senior Investment Group

Dividend Yield: 11.20%

New Senior Investment Group (NYSE: SNR) shares currently have a dividend yield of 11.20%.

New Senior Investment Group Inc. (NYSE:SNR.WI) operates independently of Newcastle Investment Corp. as of November 6, 2014.

The average volume for New Senior Investment Group has been 849,900 shares per day over the past 30 days. New Senior Investment Group has a market cap of $803.9 million and is part of the real estate industry. Shares are down 4.5% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates New Senior Investment Group 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 and poor profit margins.

Highlights from the ratings report include:
  • NEW SENIOR INVESTMENT GROUP's earnings per share declined by 23.5% in the most recent quarter compared to the same quarter a year ago. For the next year, the market is expecting a contraction of 83.8% in earnings (-$0.68 versus -$0.37).
  • 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 61.0% when compared to the same quarter one year ago, falling from -$11.15 million to -$17.96 million.
  • The gross profit margin for NEW SENIOR INVESTMENT GROUP is currently lower than what is desirable, coming in at 27.74%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -17.10% is significantly below that of the industry average.
  • Looking at the price performance of SNR's shares over the past 12 months, there is not much good news to report: the stock is down 47.28%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter.
  • Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, NEW SENIOR INVESTMENT GROUP's return on equity significantly trails that of both the industry average and the S&P 500.

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