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 4 stocks with substantial yields, that ultimately, we have rated "Hold." Mid-Con Energy Partners (NASDAQ: MCEP) shares currently have a dividend yield of 8.70%. Mid-Con Energy Partners, LP engages in the acquisition, exploitation, development, and production of oil and natural gas properties in North America. The company has a P/E ratio of 22.66. The average volume for Mid-Con Energy Partners has been 73,100 shares per day over the past 30 days. Mid-Con Energy Partners has a market cap of $453.3 million and is part of the energy industry. Shares are up 26% year to date as of the close of trading on Monday. TheStreet Ratings rates Mid-Con Energy Partners as a hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, premium valuation and generally higher debt management risk. Highlights from the ratings report include:
- Net operating cash flow has increased to $14.61 million or 41.52% when compared to the same quarter last year. In addition, MID-CON ENERGY PARTNERS -LP has also vastly surpassed the industry average cash flow growth rate of -18.16%.
- The gross profit margin for MID-CON ENERGY PARTNERS -LP is currently very high, coming in at 72.80%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, MCEP's net profit margin of 46.26% significantly outperformed against the industry.
- MID-CON ENERGY PARTNERS -LP 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. 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, MID-CON ENERGY PARTNERS -LP increased its bottom line by earning $1.63 versus $0.51 in the prior year. This year, the market expects an improvement in earnings ($2.04 versus $1.63).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 53.0% when compared to the same quarter one year ago, falling from $22.43 million to $10.54 million.
- You can view the full Mid-Con Energy Partners Ratings Report.