3 Sell-Rated Dividend Stocks: NRP, DX, WHLR

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." Natural Resources Partners Dividend Yield: 13.20% Natural Resources Partners (NYSE: NRP) shares currently have a dividend yield of 13.20%. Natural Resource Partners L.P., through its subsidiaries, owns, operates, manages, and leases mineral properties in the United States. The company operates through four segments: Coal, Hard Mineral Royalty and Other; Soda Ash; VantaCore; and Oil and Gas. The average volume for Natural Resources Partners has been 67,900 shares per day over the past 30 days. Natural Resources Partners has a market cap of $166.3 million and is part of the metals & mining industry. Shares are up 4% year-to-date as of the close of trading on Tuesday. 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 Natural Resources Partners 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 352.0% when compared to the same quarter one year ago, falling from $8.65 million to -$21.79 million.
  • The debt-to-equity ratio is very high at 18.14 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, NRP maintains a poor quick ratio of 0.80, 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 Oil, Gas & Consumable Fuels industry and the overall market, NATURAL RESOURCE PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for NATURAL RESOURCE PARTNERS LP is currently extremely low, coming in at 12.19%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -21.17% is significantly below that of the industry average.
  • Net operating cash flow has decreased to $42.07 million or 21.59% when compared to the same quarter last year. Despite a decrease in cash flow NATURAL RESOURCE PARTNERS LP is still fairing well by exceeding its industry average cash flow growth rate of -39.87%.
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Dynex Capital Dividend Yield: 13.00% Dynex Capital (NYSE: DX) shares currently have a dividend yield of 13.00%. Dynex Capital, Inc., a mortgage real estate investment trust, invests in mortgage-backed securities (MBS) on a leveraged basis in the United States. It invests in residential MBS, commercial MBS (CMBS), and CMBS interest-only securities guaranteed by agency of the U.S. government or a U.S. The average volume for Dynex Capital has been 231,200 shares per day over the past 30 days. Dynex Capital has a market cap of $316.7 million and is part of the real estate industry. Shares are up 1.1% year-to-date as of the close of trading on Tuesday. 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 Dynex Capital 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 295.2% when compared to the same quarter one year ago, falling from -$9.47 million to -$37.43 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 Real Estate Investment Trusts (REITs) industry and the overall market, DYNEX CAPITAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of DYNEX CAPITAL INC has not done very well: it is down 20.86% 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. 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.
  • DYNEX CAPITAL 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, DYNEX CAPITAL INC reported lower earnings of $0.18 versus $0.34 in the prior year. This year, the market expects an improvement in earnings ($0.87 versus $0.18).
  • DX, with its decline in revenue, underperformed when compared the industry average of 5.0%. Since the same quarter one year prior, revenues fell by 16.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
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Wheeler Real Estate Investment Dividend Yield: 13.90% Wheeler Real Estate Investment (NASDAQ: WHLR) shares currently have a dividend yield of 13.90%. Wheeler Real Estate Investment Trust, Inc. engages in acquiring, financing, developing, leasing, owning, and managing real estate properties in the mid-Atlantic, southeast, and southwest United States. The average volume for Wheeler Real Estate Investment has been 217,200 shares per day over the past 30 days. Wheeler Real Estate Investment has a market cap of $100.1 million and is part of the real estate industry. Shares are down 19.7% year-to-date as of the close of trading on Tuesday. 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 Wheeler Real Estate Investment as a sell. The company's weaknesses can be seen in multiple areas, such as its 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:

  • 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, WHEELER REAL ESTATE INVT TR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for WHEELER REAL ESTATE INVT TR is currently extremely low, coming in at 11.22%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -23.54% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$2.60 million or 1017.31% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • WHLR'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 39.15%, 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.
  • WHEELER REAL ESTATE INVT TR 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, WHEELER REAL ESTATE INVT TR reported poor results of -$5.37 versus -$1.83 in the prior year. This year, the market expects an improvement in earnings (-$0.23 versus -$5.37).
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