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 "Buy." Ryman Hospitality Properties (NYSE: RHP) shares currently have a dividend yield of 4.60%. Ryman Hospitality Properties, Inc. owns and operates hotels in the United States. The average volume for Ryman Hospitality Properties has been 1,058,700 shares per day over the past 30 days. Ryman Hospitality Properties has a market cap of $2.3 billion and is part of the real estate industry. Shares are up 15.5% year to date as of the close of trading on Thursday. TheStreet Ratings rates Ryman Hospitality Properties as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- Compared to its closing price of one year ago, RHP's share price has jumped by 38.86%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- 39.20% is the gross profit margin for RYMAN HOSPITALITY PPTYS INC 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 -5.61% is in-line with the industry average.
- RYMAN HOSPITALITY PPTYS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, RYMAN HOSPITALITY PPTYS INC swung to a loss, reporting -$0.60 versus $0.20 in the prior year. This year, the market expects an improvement in earnings ($1.57 versus -$0.60).
- RHP, with its decline in revenue, underperformed when compared the industry average of 16.4%. Since the same quarter one year prior, revenues slightly dropped by 1.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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, RYMAN HOSPITALITY PPTYS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Ryman Hospitality Properties Ratings Report.
- The revenue growth came in higher than the industry average of 6.4%. Since the same quarter one year prior, revenues rose by 18.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- PDL BIOPHARMA INC has improved earnings per share by 41.7% 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, PDL BIOPHARMA INC increased its bottom line by earning $1.47 versus $1.15 in the prior year. This year, the market expects an improvement in earnings ($1.70 versus $1.47).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Biotechnology industry. The net income increased by 26.9% when compared to the same quarter one year prior, rising from $38.94 million to $49.41 million.
- Net operating cash flow has increased to $51.59 million or 14.28% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -33.76%.
- You can view the full PDL BioPharma Ratings Report.
- COP's revenue growth has slightly outpaced the industry average of 1.3%. Since the same quarter one year prior, revenues slightly increased by 5.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 37.40% is the gross profit margin for CONOCOPHILLIPS which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 9.15% is above that of 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, CONOCOPHILLIPS has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- CONOCOPHILLIPS 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, CONOCOPHILLIPS increased its bottom line by earning $5.87 versus $5.09 in the prior year. For the next year, the market is expecting a contraction of 8.7% in earnings ($5.36 versus $5.87).
- You can view the full ConocoPhillips Ratings Report.
- Our dividend calendar.