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 and 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 5 stocks with substantial yields, that ultimately, we have rated "Buy." Kimco Realty (NYSE: KIM) shares currently have a dividend yield of 4.30%. Kimco Realty Corporation is an independent real estate investment trust. The firm invests in the real estate markets across North America. It is primarily engaged in acquisitions, development, and management of neighborhood and community shopping centers. The company has a P/E ratio of 44.53. The average volume for Kimco Realty has been 3,252,000 shares per day over the past 30 days. Kimco Realty has a market cap of $8.6 billion and is part of the real estate industry. Shares are up 7% year-to-date as of the close of trading on Monday. TheStreet Ratings rates Kimco Realty as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, revenue growth, reasonable valuation levels, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- KIMCO REALTY CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, KIMCO REALTY CORP increased its bottom line by earning $0.46 versus $0.27 in the prior year. This year, the market expects an improvement in earnings ($0.50 versus $0.46).
- Despite its growing revenue, the company underperformed as compared with the industry average of 6.8%. Since the same quarter one year prior, revenues slightly increased by 5.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- 40.83% is the gross profit margin for KIMCO REALTY CORP which we consider to be strong. 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 21.47% trails the industry average.
- 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, KIMCO REALTY CORP's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Kimco Realty Ratings Report.
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