What To Sell: 3 Sell-Rated Dividend Stocks HHS, CMFN, KRO

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." Harte-Hanks Dividend Yield: 18.70% Harte-Hanks (NYSE: HHS) shares currently have a dividend yield of 18.70%. Harte Hanks, Inc. provides various multichannel marketing services in the United States and internationally. The company operates in two segments, Customer Interaction and Trillium Software. The average volume for Harte-Hanks has been 261,800 shares per day over the past 30 days. Harte-Hanks has a market cap of $111.5 million and is part of the media industry. Shares are down 44.8% year-to-date as of the close of trading on Monday. 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 Harte-Hanks 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 Media industry. The net income has significantly decreased by 446.9% when compared to the same quarter one year ago, falling from $1.62 million to -$5.60 million.
  • The gross profit margin for HARTE HANKS INC is currently extremely low, coming in at 11.06%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -5.06% 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 71.03%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 400.00% 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.
  • HARTE HANKS 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, HARTE HANKS INC swung to a loss, reporting -$2.77 versus $0.38 in the prior year. This year, the market expects an improvement in earnings ($0.16 versus -$2.77).
  • HHS, with its decline in revenue, underperformed when compared the industry average of 8.4%. Since the same quarter one year prior, revenues slightly dropped by 8.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
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CM Finance Dividend Yield: 15.40% CM Finance (NASDAQ: CMFN) shares currently have a dividend yield of 15.40%. CM Finance Inc. is a business development company. The company has a P/E ratio of 6.54. The average volume for CM Finance has been 42,700 shares per day over the past 30 days. CM Finance has a market cap of $125.2 million and is part of the financial services industry. Shares are down 11.1% year-to-date as of the close of trading on Monday. 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 CM Finance as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity 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 Capital Markets industry. The net income has significantly decreased by 290.5% when compared to the same quarter one year ago, falling from $8.08 million to -$15.40 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, CM FINANCE 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 33.41%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 291.52% 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.
  • CM FINANCE 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. 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, CM FINANCE INC increased its bottom line by earning $1.13 versus $0.81 in the prior year. This year, the market expects an improvement in earnings ($1.56 versus $1.13).
  • The gross profit margin for CM FINANCE INC is currently very high, coming in at 77.18%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -154.60% is in-line with the industry average.
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Kronos Worldwide Dividend Yield: 9.00% Kronos Worldwide (NYSE: KRO) shares currently have a dividend yield of 9.00%. Kronos Worldwide, Inc. produces and markets titanium dioxide pigments (TiO2) worldwide. The average volume for Kronos Worldwide has been 415,400 shares per day over the past 30 days. Kronos Worldwide has a market cap of $770.6 million and is part of the chemicals industry. Shares are up 19.3% year-to-date as of the close of trading on Monday. 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 Kronos Worldwide as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, 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 Chemicals industry. The net income has significantly decreased by 202.5% when compared to the same quarter one year ago, falling from $19.90 million to -$20.40 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 Chemicals industry and the overall market, KRONOS WORLDWIDE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for KRONOS WORLDWIDE INC is currently extremely low, coming in at 12.30%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -7.10% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $2.00 million or 96.73% 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 49.30%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 205.88% 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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