What To Sell: 3 Sell-Rated Dividend Stocks CS, ING, HTS

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." Credit Suisse Group Dividend Yield: 5.00% Credit Suisse Group (NYSE: CS) shares currently have a dividend yield of 5.00%. Credit Suisse Group AG, together with its subsidiaries, provides various financial services worldwide. It operates through Swiss Universal Bank, International Wealth Management, Asia Pacific, Global Markets, and Investment Banking & Capital Markets segments. The average volume for Credit Suisse Group has been 3,276,900 shares per day over the past 30 days. Credit Suisse Group has a market cap of $28.4 billion and is part of the banking industry. Shares are down 34.2% year-to-date as of the close of trading on Wednesday. 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 Credit Suisse Group 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 1008.7% when compared to the same quarter one year ago, falling from $648.19 million to -$5,889.99 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, CREDIT SUISSE GROUP'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 39.44%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 965.78% 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.
  • CREDIT SUISSE GROUP 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, CREDIT SUISSE GROUP swung to a loss, reporting -$1.56 versus $1.01 in the prior year. This year, the market expects an improvement in earnings ($0.93 versus -$1.56).
  • CS, with its decline in revenue, slightly underperformed the industry average of 23.1%. Since the same quarter one year prior, revenues fell by 23.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
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ING Groep Dividend Yield: 7.70% ING Groep (NYSE: ING) shares currently have a dividend yield of 7.70%. ING Groep N.V., a financial institution, provides various banking products and services to individuals, small and medium-sized enterprises, and mid-corporates. It operates through Retail Netherlands, Retail Belgium, Retail Germany, Retail Other, and Wholesale Banking segments. The company has a P/E ratio of 8.18. The average volume for ING Groep has been 3,094,500 shares per day over the past 30 days. ING Groep has a market cap of $46.2 billion and is part of the banking industry. Shares are down 12.8% year-to-date as of the close of trading on Wednesday. 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 ING Groep as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow, poor profit margins 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 Commercial Banks industry. The net income has significantly decreased by 122.9% when compared to the same quarter one year ago, falling from $1,419.13 million to -$324.65 million.
  • Net operating cash flow has significantly decreased to -$1,579.56 million or 117.80% 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 ING GROEP NV is currently lower than what is desirable, coming in at 32.54%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, ING's net profit margin of -8.14% significantly underperformed when compared to the industry average.
  • ING has underperformed the S&P 500 Index, declining 20.16% 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 return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Commercial Banks industry and the overall market, ING GROEP NV's return on equity is below that of both the industry average and the S&P 500.
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Hatteras Financial Dividend Yield: 11.40% Hatteras Financial (NYSE: HTS) shares currently have a dividend yield of 11.40%. Hatteras Financial Corp. operates as an externally-managed mortgage real estate investment trust (REIT) in the United States. The average volume for Hatteras Financial has been 1,619,500 shares per day over the past 30 days. Hatteras Financial has a market cap of $1.5 billion and is part of the real estate industry. Shares are up 21.3% year-to-date as of the close of trading on Wednesday. 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 Hatteras Financial as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself. Highlights from the ratings report include:

  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, HATTERAS FINANCIAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $75.59 million or 30.28% when compared to the same quarter last year. Despite a decrease in cash flow HATTERAS FINANCIAL CORP is still fairing well by exceeding its industry average cash flow growth rate of -64.29%.
  • HTS has underperformed the S&P 500 Index, declining 13.68% 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.
  • HATTERAS FINANCIAL CORP 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, HATTERAS FINANCIAL CORP reported lower earnings of $0.31 versus $0.36 in the prior year. This year, the market expects an improvement in earnings ($1.72 versus $0.31).
  • The gross profit margin for HATTERAS FINANCIAL CORP is currently very high, coming in at 84.50%. Regardless of HTS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HTS's net profit margin of 124.37% significantly outperformed against the industry.
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