3 Sell-Rated Dividend Stocks: NAUH, USDP, DX

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."

National American University Holdings

Dividend Yield: 8.80%

National American University Holdings (NASDAQ: NAUH) shares currently have a dividend yield of 8.80%.

National American University Holdings, Inc. owns and operates National American University (NAU) that provides postsecondary education services primarily for working adults and other non-traditional students in the United States. The company operates through two segments, NAU and Other.

The average volume for National American University Holdings has been 7,600 shares per day over the past 30 days. National American University Holdings has a market cap of $49.5 million and is part of the diversified services industry. Shares are down 1.2% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates National American University Holdings 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 Diversified Consumer Services industry. The net income has significantly decreased by 229.2% when compared to the same quarter one year ago, falling from $1.46 million to -$1.89 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 Diversified Consumer Services industry and the overall market, NATIONAL AMERN UNIV HLDG 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 34.72%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 233.33% 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.
  • NATIONAL AMERN UNIV HLDG 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 not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, NATIONAL AMERN UNIV HLDG INC increased its bottom line by earning $0.27 versus $0.13 in the prior year.
  • NAUH, with its decline in revenue, underperformed when compared the industry average of 7.7%. Since the same quarter one year prior, revenues fell by 22.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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USD Partners

Dividend Yield: 12.50%

USD Partners (NYSE: USDP) shares currently have a dividend yield of 12.50%.

USD Partners LP acquires, develops, and operates energy-related rail terminals and other midstream infrastructure assets and businesses in the United States and Canada. The company operates through two segments, Terminalling Services and Fleet Services. The company has a P/E ratio of 11.84.

The average volume for USD Partners has been 52,000 shares per day over the past 30 days. USD Partners has a market cap of $223.1 million and is part of the transportation industry. Shares are up 34.4% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates USD Partners as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 5.15 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, USDP has a quick ratio of 0.56, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, USDP has underperformed the S&P 500 Index, declining 23.96% 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.
  • USD PARTNERS LP's earnings per share declined by 10.0% 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, USD PARTNERS LP turned its bottom line around by earning $0.83 versus -$0.12 in the prior year. This year, the market expects an improvement in earnings ($0.95 versus $0.83).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 5.3% when compared to the same quarter one year prior, going from $2.04 million to $2.15 million.
  • The gross profit margin for USD PARTNERS LP is rather high; currently it is at 67.09%. It has increased significantly from the same period last year. Along with this, the net profit margin of 8.15% is above that of the industry average.

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Dynex Capital

Dividend Yield: 12.10%

Dynex Capital (NYSE: DX) shares currently have a dividend yield of 12.10%.

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 214,600 shares per day over the past 30 days. Dynex Capital has a market cap of $342.2 million and is part of the real estate industry. Shares are up 9.9% year-to-date as of the close of trading on Monday.

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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 10.93% 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 ($0.85 versus $0.18).
  • DX, with its decline in revenue, underperformed when compared the industry average of 11.9%. 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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