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: 13.00%

CYS Investments (NYSE: CYS) shares currently have a dividend yield of 13.00%.

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 1,683,600 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 12.8% year-to-date as of the close of trading on Wednesday.

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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 disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • 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.
  • CYS has underperformed the S&P 500 Index, declining 10.85% from its price level of one year ago. 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 improved earnings per share by 19.4% 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, 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 92.24%. Regardless of CYS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CYS's net profit margin of 74.87% significantly outperformed against the industry.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 12.3% when compared to the same quarter one year prior, going from $54.60 million to $61.33 million.

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Energy Company of Minas Gerais

Dividend Yield: 4.90%

Energy Company of Minas Gerais (NYSE: CIG) shares currently have a dividend yield of 4.90%.

Companhia Energetica de Minas Gerais S.A., through its subsidiaries, engages in the generation, transformation, transmission, distribution, and sale of electric energy primarily in Minas Gerais, Brazil.

The average volume for Energy Company of Minas Gerais has been 5,076,000 shares per day over the past 30 days. Energy Company of Minas Gerais has a market cap of $2.5 billion and is part of the utilities industry. Shares are up 33.3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Energy Company of Minas Gerais 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, weak operating cash flow, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • CIA ENERGETICA DE MINAS's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, CIA ENERGETICA DE MINAS reported lower earnings of $1.41 versus $1.84 in the prior year. For the next year, the market is expecting a contraction of 75.2% in earnings ($0.35 versus $1.41).
  • 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 Electric Utilities industry. The net income has significantly decreased by 47.7% when compared to the same quarter one year ago, falling from $349.44 million to $182.71 million.
  • Net operating cash flow has significantly decreased to $314.63 million or 56.11% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for CIA ENERGETICA DE MINAS is rather low; currently it is at 22.92%. It has decreased significantly from the same period last year. Regardless of the weak results of the gross profit margin, the net profit margin of 10.28% is above 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 57.39%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 50.00% 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.

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Williams Partners

Dividend Yield: 12.00%

Williams Partners (NYSE: WPZ) shares currently have a dividend yield of 12.00%.

Williams Partners L.P. operates as an energy infrastructure company. It operates through Central, Northeast G&P, Atlantic-Gulf, West, and NGL & Petchem Services segments.

The average volume for Williams Partners has been 3,437,600 shares per day over the past 30 days. Williams Partners has a market cap of $17.1 billion and is part of the energy industry. Shares are up 6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Williams Partners 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 530.4% when compared to the same quarter one year ago, falling from $382.00 million to -$1,644.00 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 Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, WILLIAMS PARTNERS LP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Net operating cash flow has decreased to $563.00 million or 49.27% 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.
  • WPZ's debt-to-equity ratio of 0.86 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that WPZ's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.51 is low and demonstrates weak liquidity.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 43.78%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 874.34% 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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