What To Sell: 3 Sell-Rated Dividend Stocks TRP, ENB, 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."

TransCanada

Dividend Yield: 4.70%

TransCanada (NYSE: TRP) shares currently have a dividend yield of 4.70%.

TransCanada Corporation operates as an energy infrastructure company in North America. The company operates through three segments: Natural Gas Pipelines, Liquids Pipelines, and Energy. The company has a P/E ratio of 29.13.

The average volume for TransCanada has been 1,306,400 shares per day over the past 30 days. TransCanada has a market cap of $25.5 billion and is part of the energy industry. Shares are up 16.9% year-to-date as of the close of trading on Thursday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreet Ratings rates TransCanada 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, generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 2.14 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.31, 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 on the basis of return on equity, TRANSCANADA CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • TRANSCANADA CORP 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. During the past fiscal year, TRANSCANADA CORP swung to a loss, reporting -$1.75 versus $2.46 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 604.1% when compared to the same quarter one year ago, falling from $483.00 million to -$2,435.00 million.
  • The share price of TRANSCANADA CORP has not done very well: it is down 15.62% 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. 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.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

Enbridge

Dividend Yield: 4.10%

Enbridge (NYSE: ENB) shares currently have a dividend yield of 4.10%.

Enbridge Inc. operates as an energy transportation and distribution company in the United States and Canada. Its Liquids Pipelines segment operates common carrier and contract crude oil, natural gas liquids (NGL), and refined products pipelines and terminals. The company has a P/E ratio of 38.74.

The average volume for Enbridge has been 1,895,100 shares per day over the past 30 days. Enbridge has a market cap of $32.5 billion and is part of the energy industry. Shares are up 17.7% year-to-date as of the close of trading on Thursday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

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

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 2.25 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.44, which clearly demonstrates the inability to cover short-term cash needs.
  • 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, ENBRIDGE INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • ENB has underperformed the S&P 500 Index, declining 16.12% from its price level of one year ago. 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.
  • The gross profit margin for ENBRIDGE INC is rather low; currently it is at 15.01%. Regardless of ENB's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, ENB's net profit margin of 5.07% compares favorably to the industry average.
  • ENBRIDGE INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, ENBRIDGE INC swung to a loss, reporting -$0.07 versus $1.32 in the prior year.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

Crescent Point Energy

Dividend Yield: 6.50%

Crescent Point Energy (NYSE: CPG) shares currently have a dividend yield of 6.50%.

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 1,274,800 shares per day over the past 30 days. Crescent Point Energy has a market cap of $6.8 billion and is part of the energy industry. Shares are up 26.2% year-to-date as of the close of trading on Thursday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

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 -39.38%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 39.99%, 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.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

Other helpful dividend tools from TheStreet:

More from Markets

Jim Cramer Live: Breaking Down the Markets and Dave & Buster's

Jim Cramer Live: Breaking Down the Markets and Dave & Buster's

Dow Jumps on Signs of Progress in U.S.-China Trade Discussions

Dow Jumps on Signs of Progress in U.S.-China Trade Discussions

American Eagle Shares Fall After Company Issues Weak Guidance

American Eagle Shares Fall After Company Issues Weak Guidance

Here's Why I Like Adobe Stock Long-Term

Here's Why I Like Adobe Stock Long-Term

Here Are 3 Small-Cap Names for Biotech Investors to Consider

Here Are 3 Small-Cap Names for Biotech Investors to Consider