Yesterday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on these ASX 200 shares:

Commonwealth Bank of Australia (ASX: CBA)

According to a note out of Goldman Sachs, it has retained its sell rating and $62.65 price target on this banking giant’s shares. The broker expects Commonwealth Bank’s strong deposit franchise to leave it more vulnerable to the medium term impact of lower rates. In addition to this, it notes that the bank has the highest exposure to more competitive mortgages relative to its peers. Overall, it doesn’t believe its shares deserve to trade at such a premium to the rest of the big four. The Commonwealth Bank share price is trading notably higher than this price target at $71.84.

GPT Group (ASX: GPT)

Analysts at Morgan Stanley have retained their underweight rating and $4.20 price target on this property company’s shares. According to the note, the broker was not surprised to see GPT reduce the valuations of its retail portfolio by a total of 8.8% or $476.7 million. But the devaluations may not stop there. It notes that the company plans to have all its properties independently valued at the end of June. GPT’s shares are changing hands at $4.46 this afternoon.

Wesfarmers Ltd (ASX: WES)

A note out of Citi reveals that its analysts have retained their sell rating but lifted the price target on this conglomerate’s shares to $38.20. According to the note, the broker was pleased with the strong sales growth achieved by Bunnings and Officeworks so far in the second half. However, it notes that this sales growth is coming at a cost. As such, the company is unlikely to benefit as greatly from the sales surge as you might think. Furthermore, Citi is expecting its sales growth to moderate as restrictions ease. As a result, it sees no reason to change its rating at this point. The Wesfarmers share price is up over 4% to $43.57 today.

More reading

• Are Aussies still withdrawing cash like crazy?
• How to be like Warren Buffett and not lose money investing in ASX 200 shares
• Afterpay share price overbought says analyst
• Why the CBA share price is lagging its big four cohorts
• 3 top ASX shares for growth, income, and value investors to buy today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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When it comes to ASX dividend shares, there are few choices that can match WAM Capital Limited (ASX: WAM) right now for raw income potential.

WAM Capital isn’t an ordinary ASX dividend share though. It’s a listed investment company (LIC) that invests in mostly undervalued, mid-cap ASX shares with what WAM Capital calls a potential ‘catalyst’.  Once this catalyst has been realised by the market, WAM is normally inclined to sell the company. This strategy has worked very well for the LIC in the past. Since its inception in 1999, WAM Capital has returned an average of 15.7% per annum to its investors (before fees). A major part of these returns have come from the dividends WAM Capital has managed to dish out.

Since the global financial crisis in 2008, this LIC has managed to hold or increase its dividends every single year. On current prices, these are worth a 7.71% yield – or 11% grossed-up with full franking.

Can WAM Capital afford its 11% yield?

That’s hopefully the first question that comes to mind when you see a yield like 11%. Normally, this would indicate that the market views this yield as unsustainable and therefore a dividend trap. But listed investment companies are often treated a little differently by the market, so let’s probe a bit farther.

As at 30 April, WAM Capital’s major holdings include TPG Telecom Ltd (ASX: TPM), Cleanaway Waste Management Ltd (ASX: CWY) and Aristocrat Leisure Limited (ASX: ALL). It also had a cash weighting of 24.6% – which indicates a bearish outlook for ASX 200 shares in my view.

On a per share basis, this LIC’s net tangible asset’s (NTA) came to $1.47 – which is a long way from the current share price of $2.01.

So in other words, this yield is now looking even more impressive considering the share is trading for a 37% premium to its underlying value. If WAM Capital shares were trading at their NTA value, the dividend yield would be 10.54% or 15.06% grossed-up.

But here’s the kicker, WAM Capital’s last interim dividend came in at 7.75 cents per share. As of April, the LIC only had 6.1 cents per share left in its profit reserves. This tells us that WAM Capital is running out of gas in the tank. Unless things turn around soon (and it will have to be very soon), it doesn’t look like this company will be able to afford to continue paying its generous dividends at their current levels.

As such, I think there is a lot of risk in buying WAM Capital shares today for dividend income. Particularly since the share price is trading 37% above its underlying value, as this would effectively mean buying 63 cents worth of value for $1.

Thus, it’s a ‘no-deal’ from me.

More reading

• The TPG share price is on the up. A good long-term buy today?
• Fund managers have been buying these ASX shares
• ASX 200 Weekly Wrap: ASX bulls crash through 6,000 points
• How to turn $20,000 into $275,000 in 10 years with ASX 200 shares
• These were the worst performers on the ASX 200 last week

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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