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." Annaly Capital Management (NYSE: NLY) shares currently have a dividend yield of 13.50%. Annaly Capital Management, Inc. owns, manages, and finances a portfolio of real estate related investments in United States. The company has a P/E ratio of 3.04. The average volume for Annaly Capital Management has been 13,497,600 shares per day over the past 30 days. Annaly Capital Management has a market cap of $9.8 billion and is part of the real estate industry. Shares are down 27.1% year to date as of the close of trading on Friday. TheStreet Ratings rates Annaly Capital Management as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good. Highlights from the ratings report include:
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation.
- The gross profit margin for ANNALY CAPITAL MANAGEMENT is currently very high, coming in at 91.13%. Regardless of NLY's high profit margin, it has managed to decrease from the same period last year.
- Since the same quarter one year prior, revenues fell by 29.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- ANNALY CAPITAL MANAGEMENT's earnings per share declined by 18.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ANNALY CAPITAL MANAGEMENT increased its bottom line by earning $1.69 versus $0.49 in the prior year. For the next year, the market is expecting a contraction of 33.1% in earnings ($1.13 versus $1.69).
- You can view the full Annaly Capital Management Ratings Report.
- Since the same quarter one year prior, revenues leaped by 50.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Net operating cash flow has significantly increased by 149.72% to $78.53 million when compared to the same quarter last year.
- The net income increased by 5.2% when compared to the same quarter one year prior, going from -$142.91 million to -$135.44 million.
- NORTHSTAR REALTY FINANCE CP has improved earnings per share by 38.7% 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NORTHSTAR REALTY FINANCE CP continued to lose money by earning -$2.27 versus -$3.23 in the prior year. This year, the market expects an improvement in earnings ($1.06 versus -$2.27).
- The gross profit margin for NORTHSTAR REALTY FINANCE CP is rather high; currently it is at 61.93%. It has increased from the same quarter the previous year.
- You can view the full Northstar Realty Finance Corporation Ratings Report.
- APL's very impressive revenue growth greatly exceeded the industry average of 5.4%. Since the same quarter one year prior, revenues leaped by 97.2%. 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 increased to $79.40 million or 30.18% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.99%.
- 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. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- ATLAS PIPELINE PARTNER LP has experienced 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 earnings per share over the past two years. During the past fiscal year, ATLAS PIPELINE PARTNER LP reported lower earnings of $0.97 versus $5.22 in the prior year.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 244.2% when compared to the same quarter one year ago, falling from -$7.87 million to -$27.08 million.
- You can view the full Atlas Pipeline Partners Ratings Report.
- Our dividend calendar.