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."

USA Compression Partners

Dividend Yield: 14.60%

USA Compression Partners (NYSE: USAC) shares currently have a dividend yield of 14.60%.

USA Compression Partners, LP provides natural gas compression services under term contracts with customers in the oil and gas industry in the United States. It engineers, designs, operates, services, and repairs its compression units and maintains related support inventory and equipment.

The average volume for USA Compression Partners has been 133,000 shares per day over the past 30 days. USA Compression Partners has a market cap of $781.5 million and is part of the energy industry. Shares are up 25.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates USA Compression Partners 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 feeble growth in its earnings per share.

Highlights from the ratings report include:
  • The debt-to-equity ratio of 1.04 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, USAC maintains a poor quick ratio of 0.77, 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 Energy Equipment & Services industry and the overall market, USA COMPRESSION PRTNRS LP'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 35.38%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 33.33% 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.
  • USA COMPRESSION PRTNRS LP's earnings per share declined by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, USA COMPRESSION PRTNRS LP swung to a loss, reporting -$2.93 versus $0.57 in the prior year. This year, the market expects an improvement in earnings ($0.55 versus -$2.93).
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Energy Equipment & Services industry average, but is less than that of the S&P 500. The net income has significantly decreased by 25.5% when compared to the same quarter one year ago, falling from $11.46 million to $8.54 million.

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Stonemor Partners

Dividend Yield: 11.20%

Stonemor Partners (NYSE: STON) shares currently have a dividend yield of 11.20%.

StoneMor Partners L.P., together with its subsidiaries, owns and operates cemeteries in the United States. It operates through two segments, Cemetery Operations and Funeral Homes.

The average volume for Stonemor Partners has been 231,700 shares per day over the past 30 days. Stonemor Partners has a market cap of $828.5 million and is part of the diversified services industry. Shares are down 11.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Stonemor Partners as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and generally high debt management risk.

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 Diversified Consumer Services industry and the overall market, STONEMOR PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $5.23 million or 10.57% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Currently the debt-to-equity ratio of 1.84 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Regardless of the company's weak debt-to-equity ratio, STON has managed to keep a strong quick ratio of 2.00, which demonstrates the ability to cover short-term cash needs.
  • STON has underperformed the S&P 500 Index, declining 21.66% 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.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Diversified Consumer Services industry average, but is greater than that of the S&P 500. The net income increased by 13.8% when compared to the same quarter one year prior, going from -$8.88 million to -$7.66 million.

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Ashford Hospitality

Dividend Yield: 9.70%

Ashford Hospitality (NYSE: AHT) shares currently have a dividend yield of 9.70%.

Ashford Hospitality Trust, Inc. is a publicly owned real estate investment trust. The firm engages in investment and management of properties in the hospitality industry. It invests in the real estate markets of the United States.

The average volume for Ashford Hospitality has been 595,600 shares per day over the past 30 days. Ashford Hospitality has a market cap of $473.6 million and is part of the real estate industry. Shares are down 21.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Ashford Hospitality 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, 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 103.1% when compared to the same quarter one year ago, falling from $321.50 million to -$9.99 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 Real Estate Investment Trusts (REITs) industry and the overall market, ASHFORD HOSPITALITY TRUST's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ASHFORD HOSPITALITY TRUST is currently extremely low, coming in at 10.89%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.74% 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 38.24%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 106.38% 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.
  • ASHFORD HOSPITALITY TRUST 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ASHFORD HOSPITALITY TRUST turned its bottom line around by earning $2.33 versus -$0.73 in the prior year. For the next year, the market is expecting a contraction of 122.7% in earnings (-$0.53 versus $2.33).

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