3 Sell-Rated Dividend Stocks: CELP, MITT, SNR

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."

Cypress Energy Partners

Dividend Yield: 15.40%

Cypress Energy Partners (NYSE: CELP) shares currently have a dividend yield of 15.40%.

Cypress Energy Partners, L.P. provides pipeline inspection and integrity, and environmental services in North America. The company operates in three segments: Pipeline Inspection Services (PIS), Integrity Services (IS), and Water and Environmental Services (W&ES). The company has a P/E ratio of 81.08.

The average volume for Cypress Energy Partners has been 35,200 shares per day over the past 30 days. Cypress Energy Partners has a market cap of $124.8 million and is part of the energy industry. Shares are up 16.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Cypress Energy 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, unimpressive growth in net income, poor profit margins, weak operating cash flow and generally high debt management risk.

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 38.12%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 100.00% 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.
  • 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 Services & Supplies industry. The net income has significantly decreased by 101.0% when compared to the same quarter one year ago, falling from $2.66 million to -$0.03 million.
  • The gross profit margin for CYPRESS ENERGY PARTNERS LP is currently extremely low, coming in at 10.56%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.03% trails that of the industry average.
  • Net operating cash flow has decreased to $10.98 million or 18.92% 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 5.05 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 5.53, which shows the ability to cover short-term cash needs.

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AG Mortgage Investment

Dividend Yield: 13.10%

AG Mortgage Investment (NYSE: MITT) shares currently have a dividend yield of 13.10%.

AG Mortgage Investment Trust, Inc., a real estate investment trust, focuses on investing in, acquiring, and managing a portfolio of residential mortgage assets, other real estate-related securities, and financial assets.

The average volume for AG Mortgage Investment has been 139,100 shares per day over the past 30 days. AG Mortgage Investment has a market cap of $407.9 million and is part of the real estate industry. Shares are up 11.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates AG Mortgage Investment 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 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 119.2% when compared to the same quarter one year ago, falling from $12.76 million to -$2.45 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, AG MORTGAGE INVESTMENT TRUST's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $14.65 million or 37.11% 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 share price of AG MORTGAGE INVESTMENT TRUST has not done very well: it is down 21.96% 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.
  • AG MORTGAGE INVESTMENT 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. 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, AG MORTGAGE INVESTMENT TRUST reported lower earnings of $0.01 versus $3.38 in the prior year. This year, the market expects an improvement in earnings ($1.76 versus $0.01).

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New Senior Investment Group

Dividend Yield: 9.10%

New Senior Investment Group (NYSE: SNR) shares currently have a dividend yield of 9.10%.

New Senior Investment Group Inc. (NYSE:SNR.WI) operates independently of Newcastle Investment Corp. as of November 6, 2014.

The average volume for New Senior Investment Group has been 474,400 shares per day over the past 30 days. New Senior Investment Group has a market cap of $936.1 million and is part of the real estate industry. Shares are up 13.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates New Senior Investment Group as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, 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 compared to the Real Estate Investment Trusts (REITs) industry average, but is greater than that of the S&P 500. The net income has decreased by 2.8% when compared to the same quarter one year ago, dropping from -$21.25 million to -$21.85 million.
  • The gross profit margin for NEW SENIOR INVESTMENT GROUP is currently lower than what is desirable, coming in at 26.26%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -18.52% is significantly below that of the industry average.
  • SNR has underperformed the S&P 500 Index, declining 20.73% 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.
  • NEW SENIOR INVESTMENT GROUP has improved earnings per share by 18.8% 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, NEW SENIOR INVESTMENT GROUP reported poor results of -$1.11 versus -$0.37 in the prior year. This year, the market expects an improvement in earnings (-$0.91 versus -$1.11).
  • Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, NEW SENIOR INVESTMENT GROUP's return on equity significantly trails that of both the industry average and the S&P 500.

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