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." New York Community Bancorp (NYSE: NYCB) shares currently have a dividend yield of 7.40%. New York Community Bancorp, Inc. operates as a multi-bank holding company for New York Community Bank and New York Commercial Bank that offer banking products and financial services in New York, New Jersey, Florida, Ohio, and Arizona. The company has a P/E ratio of 12.03. The average volume for New York Community Bancorp has been 2,947,800 shares per day over the past 30 days. New York Community Bancorp has a market cap of $6.0 billion and is part of the banking industry. Shares are up 3.3% year to date as of the close of trading on Thursday. TheStreet Ratings rates New York Community Bancorp as a buy. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins, increase in stock price during the past year, notable return on equity and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow. Highlights from the ratings report include:
- The gross profit margin for NEW YORK CMNTY BANCORP INC is rather high; currently it is at 69.90%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, NYCB's net profit margin of 24.30% significantly trails the industry average.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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.
- 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 Thrifts & Mortgage Finance industry and the overall market on the basis of return on equity, NEW YORK CMNTY BANCORP INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The revenue fell significantly faster than the industry average of 40.0%. Since the same quarter one year prior, revenues slightly dropped by 4.0%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- You can view the full New York Community Bancorp Ratings Report.