What To Sell: 3 Sell-Rated Dividend Stocks GLP, DLNG, CCLP

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."

Global Partners

Dividend Yield: 13.60%

Global Partners (NYSE: GLP) shares currently have a dividend yield of 13.60%.

Global Partners LP, a midstream logistics and marketing company, distributes gasoline, distillates, residual oil, and renewable fuels to wholesalers, retailers, and commercial customers in the New England states and New York.

The average volume for Global Partners has been 165,700 shares per day over the past 30 days. Global Partners has a market cap of $462.0 million and is part of the wholesale industry. Shares are down 25.6% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Global Partners as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, feeble growth in its earnings per share, deteriorating net income, generally high debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 57.74%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 122.82% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • GLOBAL PARTNERS LP 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, GLOBAL PARTNERS LP reported lower earnings of $1.16 versus $3.96 in the prior year. For the next year, the market is expecting a contraction of 135.8% in earnings (-$0.42 versus $1.16).
  • 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 123.1% when compared to the same quarter one year ago, falling from $30.42 million to -$7.02 million.
  • The debt-to-equity ratio is very high at 2.17 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, GLP has a quick ratio of 0.61, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • 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. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, GLOBAL PARTNERS LP's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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Dynagas LNG Partners

Dividend Yield: 11.90%

Dynagas LNG Partners (NYSE: DLNG) shares currently have a dividend yield of 11.90%.

Dynagas LNG Partners LP, through its subsidiaries, operates in the seaborne transportation industry worldwide. The company owns and operates liquefied natural gas (LNG) vessels. The company has a P/E ratio of 8.62.

The average volume for Dynagas LNG Partners has been 213,300 shares per day over the past 30 days. Dynagas LNG Partners has a market cap of $505.0 million and is part of the transportation industry. Shares are up 47.3% year-to-date as of the close of trading on Thursday.

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

Highlights from the ratings report include:
  • DLNG has underperformed the S&P 500 Index, declining 14.05% 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 debt-to-equity ratio is very high at 2.01 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, DLNG's quick ratio is somewhat strong at 1.03, demonstrating the ability to handle short-term liquidity needs.
  • Net operating cash flow has decreased to $23.64 million or 10.40% when compared to the same quarter last year. Despite a decrease in cash flow DYNAGAS LNG PARTNERS LP is still fairing well by exceeding its industry average cash flow growth rate of -49.95%.
  • 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, DYNAGAS LNG PARTNERS LP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • DYNAGAS LNG PARTNERS LP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, DYNAGAS LNG PARTNERS LP increased its bottom line by earning $1.60 versus $1.58 in the prior year. This year, the market expects an improvement in earnings ($1.75 versus $1.60).

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CSI Compressco

Dividend Yield: 19.60%

CSI Compressco (NASDAQ: CCLP) shares currently have a dividend yield of 19.60%.

CSI Compressco LP provides compression services and equipment for natural gas and oil production, gathering, transportation, processing, and storage applications in the United States and internationally.

The average volume for CSI Compressco has been 117,200 shares per day over the past 30 days. CSI Compressco has a market cap of $255.8 million and is part of the energy industry. Shares are down 32% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates CSI Compressco as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally high debt management risk 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 Energy Equipment & Services industry. The net income has significantly decreased by 5926.8% when compared to the same quarter one year ago, falling from $1.81 million to -$105.35 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 Energy Equipment & Services industry and the overall market, CSI COMPRESSCO LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $15.10 million or 53.52% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The debt-to-equity ratio is very high at 2.65 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, CCLP's quick ratio is somewhat strong at 1.03, demonstrating the ability to handle short-term liquidity needs.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 54.34%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 7875.00% 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.

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