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 3 stocks with substantial yields, that ultimately, we have rated "Hold." BioMed Realty (NYSE: BMR) shares currently have a dividend yield of 4.20%. BioMed Realty Trust, Inc. operates as a real estate investment trust (REIT) that focuses on providing real estate to the life science industry in the United States. The company has a P/E ratio of 289.86. The average volume for BioMed Realty has been 1,801,600 shares per day over the past 30 days. BioMed Realty has a market cap of $3.5 billion and is part of the real estate industry. Shares are up 16.3% year to date as of the close of trading on Wednesday. TheStreet Ratings rates BioMed Realty as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- BMR's revenue growth has slightly outpaced the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 24.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has significantly increased by 55.55% to $62.20 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 38.81%.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, BIOMED REALTY TRUST INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for BIOMED REALTY TRUST INC is currently lower than what is desirable, coming in at 25.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 5.90% significantly trails the industry average.
- You can view the full BioMed Realty Ratings Report.
- RGC's revenue growth has slightly outpaced the industry average of 8.4%. Since the same quarter one year prior, revenues rose by 17.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 700.00% and other important driving factors, this stock has surged by 25.54% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although RGC had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- Net operating cash flow has increased to $164.90 million or 24.07% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -6.20%.
- The gross profit margin for REGAL ENTERTAINMENT GROUP is rather low; currently it is at 21.80%. Regardless of RGC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.15% trails the industry average.
- You can view the full Regal Entertainment Group Ratings Report.
- The revenue growth came in higher than the industry average of 10.8%. Since the same quarter one year prior, revenues rose by 21.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 268.9% when compared to the same quarter one year prior, rising from $3.84 million to $14.17 million.
- BGC PARTNERS INC reported significant earnings per share improvement in the most recent quarter compared to 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, BGC PARTNERS INC reported lower earnings of $0.16 versus $0.19 in the prior year. This year, the market expects an improvement in earnings ($0.54 versus $0.16).
- The gross profit margin for BGC PARTNERS INC is currently extremely low, coming in at 1.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.29% significantly trails the industry average.
- BGCP has underperformed the S&P 500 Index, declining 22.51% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full BGC Partners Ratings Report.
- Our dividend calendar.