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: 18.10%

Atlas Resource Partners (NYSE: ARP) shares currently have a dividend yield of 18.10%.

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. It operates through three segments: Gas and Oil Production, Well Construction and Completion, and Other Partnership Management.

The average volume for Atlas Resource Partners has been 904,600 shares per day over the past 30 days. Atlas Resource Partners has a market cap of $85.0 million and is part of the energy industry. Shares are down 13% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Atlas Resource Partners as a sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • ARP'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 87.86%, 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.
  • Despite the weak revenue results, ARP has outperformed against the industry average of 34.6%. Since the same quarter one year prior, revenues fell by 24.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • ATLAS RESOURCE PARTNERS LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ATLAS RESOURCE PARTNERS LP reported poor results of -$8.15 versus -$7.76 in the prior year. This year, the market expects an improvement in earnings (-$0.42 versus -$8.15).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 50.3% when compared to the same quarter one year prior, rising from -$580.75 million to -$288.72 million.

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KCAP Financial

Dividend Yield: 18.80%

KCAP Financial (NASDAQ: KCAP) shares currently have a dividend yield of 18.80%.

KCAP Financial, Inc. is a private equity and venture capital firm specializing in mid market, buyouts, and mezzanine investments. It focuses on mature and middle market companies.

The average volume for KCAP Financial has been 140,500 shares per day over the past 30 days. KCAP Financial has a market cap of $118.4 million and is part of the financial services industry. Shares are down 21.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates KCAP Financial 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 294.9% when compared to the same quarter one year ago, falling from $8.24 million to -$16.05 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, KCAP FINANCIAL 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 57.24%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 286.95% 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.
  • KCAP FINANCIAL 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, KCAP FINANCIAL INC reported lower earnings of $0.43 versus $0.53 in the prior year. This year, the market expects an improvement in earnings ($0.62 versus $0.43).
  • Net operating cash flow has slightly increased to $11.02 million or 6.26% when compared to the same quarter last year. Despite an increase in cash flow of 6.26%, KCAP FINANCIAL INC is still growing at a significantly lower rate than the industry average of 139.02%.

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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 675,900 shares per day over the past 30 days. New Senior Investment Group has a market cap of $762.0 million and is part of the real estate industry. Shares are down 4.7% year-to-date as of the close of trading on Wednesday.

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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 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 65.8% when compared to the same quarter one year ago, falling from -$13.28 million to -$22.02 million.
  • The gross profit margin for NEW SENIOR INVESTMENT GROUP is currently extremely low, coming in at 3.29%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -18.59% 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 44.63%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 30.00% 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.
  • NEW SENIOR INVESTMENT GROUP's earnings per share declined by 30.0% in the most recent quarter compared to 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, NEW SENIOR INVESTMENT GROUP reported poor results of -$1.11 versus -$0.37 in the prior year. This year, the market expects an improvement in earnings (-$0.82 versus -$1.11).
  • 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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