3 Sell-Rated Dividend Stocks: BNS, HSC, HTS
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer
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."
Dividend Yield: 4.30%
(NYSE:
) shares currently have a dividend yield of 4.30%.
The Bank of Nova Scotia provides various personal, commercial, corporate, and investment banking services in Canada and internationally. The company has a P/E ratio of 11.10.
The average volume for Bank of Nova Scotia has been 850,500 shares per day over the past 30 days. Bank of Nova Scotia has a market cap of $60.0 billion and is part of the banking industry. Shares are down 12% year-to-date as of the close of trading on Wednesday.
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TheStreet Ratings rates
Bank of Nova Scotia
as a
. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.
Highlights from the ratings report include:
- BNS has underperformed the S&P 500 Index, declining 15.13% from its price level of one year ago. 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.
- BANK OF NOVA SCOTIA'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 year. During the past fiscal year, BANK OF NOVA SCOTIA increased its bottom line by earning $5.66 versus $1.29 in the prior year.
- The net income growth from the same quarter one year ago has exceeded that of the Commercial Banks industry average, but is less than that of the S&P 500. The net income increased by 1.5% when compared to the same quarter one year prior, going from $1,655.00 million to $1,679.00 million.
- Net operating cash flow has significantly increased by 286.39% to $5,850.00 million when compared to the same quarter last year. Despite an increase in cash flow, BANK OF NOVA SCOTIA's cash flow growth rate is still lower than the industry average growth rate of 296.61%.
- The gross profit margin for BANK OF NOVA SCOTIA is currently very high, coming in at 72.49%. Regardless of BNS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BNS's net profit margin of 21.67% significantly outperformed against the industry.
- You can view the full Bank of Nova Scotia Ratings Report.
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Dividend Yield: 5.10%
(NYSE:
) shares currently have a dividend yield of 5.10%.
Harsco Corporation provides industrial services and engineered products worldwide. The company operates through three segments: Harsco Metals and Minerals, Harsco Rail, and Harsco Industrial.
The average volume for Harsco has been 629,700 shares per day over the past 30 days. Harsco has a market cap of $1.3 billion and is part of the metals & mining industry. Shares are down 11.5% year-to-date as of the close of trading on Wednesday.
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TheStreet Ratings rates
Harsco
as a
. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk, 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 when compared to that of the S&P 500 and the Machinery industry. The net income has significantly decreased by 80.0% when compared to the same quarter one year ago, falling from -$25.33 million to -$45.59 million.
- The debt-to-equity ratio is very high at 2.78 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, HSC maintains a poor quick ratio of 0.74, which illustrates the inability to avoid short-term cash problems.
- The gross profit margin for HARSCO CORP is rather low; currently it is at 16.90%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -9.26% is significantly below that of the industry average.
- The share price of HARSCO CORP has not done very well: it is down 22.75% 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.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Machinery industry and the overall market, HARSCO CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Harsco Ratings Report.
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Dividend Yield: 11.00%
(NYSE:
) shares currently have a dividend yield of 11.00%.
Hatteras Financial Corp. operates as an externally-managed mortgage real estate investment trust (REIT) in the United States. The company has a P/E ratio of 50.36.
The average volume for Hatteras Financial has been 740,400 shares per day over the past 30 days. Hatteras Financial has a market cap of $1.8 billion and is part of the real estate industry. Shares are up 0.1% year-to-date as of the close of trading on Wednesday.
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TheStreet Ratings rates
Hatteras Financial
as a
. 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 weak operating cash flow.
Highlights from the ratings report include:
- The share price of HATTERAS FINANCIAL CORP has not done very well: it is down 8.75% 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 significantly decreased by 159.3% when compared to the same quarter one year ago, falling from -$9.97 million to -$25.85 million.
- Net operating cash flow has decreased to $108.42 million or 25.60% 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.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, HATTERAS FINANCIAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- HATTERAS FINANCIAL CORP 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. 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, HATTERAS FINANCIAL CORP turned its bottom line around by earning $0.36 versus -$1.60 in the prior year. This year, the market expects an improvement in earnings ($2.07 versus $0.36).
- You can view the full Hatteras Financial Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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