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 "Hold." Brandywine Realty (NYSE: BDN) shares currently have a dividend yield of 4.70%. Brandywine Realty Trust is a publicly owned real estate investment firm. The firm engages in the engaged in the ownership, management, leasing, acquisition, and development of office and industrial properties. It primarily manages Class-A, suburban and urban office portfolio. The average volume for Brandywine Realty has been 1,241,300 shares per day over the past 30 days. Brandywine Realty has a market cap of $2.0 billion and is part of the real estate industry. Shares are up 3.4% year to date as of the close of trading on Tuesday. TheStreet Ratings rates Brandywine Realty as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we find that the company's profit margins have been poor overall. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.7%. Since the same quarter one year prior, revenues slightly increased by 6.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Net operating cash flow has increased to $46.95 million or 49.52% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 5.48%.
- 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. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- 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 Real Estate Investment Trusts (REITs) industry and the overall market, BRANDYWINE REALTY TRUST's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for BRANDYWINE REALTY TRUST is rather low; currently it is at 21.64%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.99% significantly trails the industry average.
- You can view the full Brandywine Realty Ratings Report.