3 Sell-Rated Dividend Stocks: PAGP, WPG, MPLX
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: 7.40%
(NYSE:
) shares currently have a dividend yield of 7.40%.
Plains GP Holdings, L.P., through its interest in Plains AAP, L.P., owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids, natural gas, and refined products in the United States and Canada. The company has a P/E ratio of 21.79.
The average volume for Plains GP Holdings has been 2,692,400 shares per day over the past 30 days. Plains GP Holdings has a market cap of $2.8 billion and is part of the energy industry. Shares are down 53.1% year-to-date as of the close of trading on Tuesday.
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TheStreet Ratings rates
Plains GP Holdings
as a
. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, generally disappointing historical performance in the stock itself and poor profit margins.
Highlights from the ratings report include:
- The debt-to-equity ratio is very high at 5.86 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- PAGP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 58.57%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
- The gross profit margin for PLAINS GP HOLDINGS LP is currently extremely low, coming in at 9.04%. Regardless of PAGP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, PAGP's net profit margin of 0.57% compares favorably to 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 Oil, Gas & Consumable Fuels industry and the overall market, PLAINS GP HOLDINGS LP's return on equity is below that of both the industry average and the S&P 500.
- Along with the very weak revenue results, PAGP underperformed when compared to the industry average of 36.8%. Since the same quarter one year prior, revenues plummeted by 50.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full Plains GP Holdings Ratings Report.
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Dividend Yield: 9.30%
(NYSE:
) shares currently have a dividend yield of 9.30%.
Washington Prime Group Inc. (NYSE:WPG.WI) operates independently of Simon Property Group Inc. as of May 28, 2014. The company has a P/E ratio of 54.00.
The average volume for WP Glimcher has been 1,183,300 shares per day over the past 30 days. WP Glimcher has a market cap of $2.0 billion and is part of the real estate industry. Shares are down 38.9% year-to-date as of the close of trading on Tuesday.
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TheStreet Ratings rates
WP Glimcher
as a
. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, feeble growth in its earnings per share, deteriorating net income and poor profit margins.
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 37.21%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 90.47% 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.
- WP GLIMCHER INC 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. For the next year, the market is expecting a contraction of 89.1% in earnings ($0.12 versus $1.10).
- 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 76.5% when compared to the same quarter one year ago, falling from $32.20 million to $7.57 million.
- The gross profit margin for WP GLIMCHER INC is currently lower than what is desirable, coming in at 25.75%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 3.48% significantly trails the industry average.
- Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, WP GLIMCHER INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full WP Glimcher Ratings Report.
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Dividend Yield: 4.50%
(NYSE:
) shares currently have a dividend yield of 4.50%.
MPLX LP owns, operates, develops, and acquires pipelines and other midstream assets related to the transportation and storage of crude oil, refined product, and other hydrocarbon-based products in the United States. The company has a P/E ratio of 23.08.
The average volume for MPLX has been 403,400 shares per day over the past 30 days. MPLX has a market cap of $3.4 billion and is part of the energy industry. Shares are down 43.5% year-to-date as of the close of trading on Tuesday.
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TheStreet Ratings rates
MPLX
as a
. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, generally high debt management risk and weak operating cash flow.
Highlights from the ratings report include:
- MPLX's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 39.71%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
- Currently the debt-to-equity ratio of 1.55 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, MPLX's quick ratio is somewhat strong at 1.16, demonstrating the ability to handle short-term liquidity needs.
- Net operating cash flow has declined marginally to $57.00 million or 7.91% when compared to the same quarter last year. Despite a decrease in cash flow MPLX LP is still fairing well by exceeding its industry average cash flow growth rate of -26.28%.
- 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 Oil, Gas & Consumable Fuels industry and the overall market, MPLX LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for MPLX LP is rather high; currently it is at 54.44%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 27.92% significantly outperformed against the industry average.
- You can view the full MPLX Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.