3 Sell-Rated Dividend Stocks: CELP, FSAM, ANH

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 81.15.

The average volume for Cypress Energy Partners has been 34,600 shares per day over the past 30 days. Cypress Energy Partners has a market cap of $124.9 million and is part of the energy industry. Shares are up 22.3% year-to-date as of the close of trading on Friday.

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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:
  • The share price of CYPRESS ENERGY PARTNERS LP has not done very well: it is down 18.10% 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. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others 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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Fifth Street Asset Management

Dividend Yield: 9.70%

Fifth Street Asset Management (NASDAQ: FSAM) shares currently have a dividend yield of 9.70%.

Fifth Street Asset Management Inc. is an asset management holding company. The firm provides asset management services through its subsidiaries. Fifth Street Asset Management Inc. was founded in 1998 and is headquartered in Greenwich, Connecticut.

The average volume for Fifth Street Asset Management has been 34,200 shares per day over the past 30 days. Fifth Street Asset Management has a market cap of $201.1 million and is part of the financial services industry. Shares are up 27% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Fifth Street Asset Management as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, poor profit margins, weak operating cash flow 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 Capital Markets industry. The net income has significantly decreased by 195.5% when compared to the same quarter one year ago, falling from $1.30 million to -$1.24 million.
  • The gross profit margin for FIFTH STREET ASSET MGMT INC is currently lower than what is desirable, coming in at 32.58%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -6.50% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$15.03 million or 249.97% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 58.87%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 214.28% 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.
  • FSAM, with its decline in revenue, slightly underperformed the industry average of 13.7%. Since the same quarter one year prior, revenues fell by 23.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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Anworth Mortgage Asset

Dividend Yield: 12.60%

Anworth Mortgage Asset (NYSE: ANH) shares currently have a dividend yield of 12.60%.

Anworth Mortgage Asset Corporation operates as a real estate investment trust primarily in the United States.

The average volume for Anworth Mortgage Asset has been 630,100 shares per day over the past 30 days. Anworth Mortgage Asset has a market cap of $460.1 million and is part of the real estate industry. Shares are up 10.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Anworth Mortgage Asset 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 and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • The share price of ANWORTH MTG ASSET CORP has not done very well: it is down 6.48% 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. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others 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 Real Estate Investment Trusts (REITs) industry. The net income has decreased by 24.2% when compared to the same quarter one year ago, dropping from -$16.31 million to -$20.26 million.
  • ANWORTH MTG ASSET CORP's earnings per share declined by 29.4% 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ANWORTH MTG ASSET CORP reported lower earnings of $0.07 versus $0.18 in the prior year. This year, the market expects an improvement in earnings ($0.19 versus $0.07).
  • 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, ANWORTH MTG ASSET CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ANWORTH MTG ASSET CORP is currently very high, coming in at 90.12%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -55.42% is in-line with the industry average.

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