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." Suburban Propane Partners (NYSE: SPH) shares currently have a dividend yield of 7.70%. Suburban Propane Partners, L.P., through its subsidiaries, engages in the retail marketing and distribution of propane, fuel oil, and refined fuels. The company has a P/E ratio of 34.13. The average volume for Suburban Propane Partners has been 120,100 shares per day over the past 30 days. Suburban Propane Partners has a market cap of $2.8 billion and is part of the utilities industry. Shares are up 18.3% year to date as of the close of trading on Friday. TheStreet Ratings rates Suburban Propane Partners as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year and impressive record of earnings per share growth. 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:
- Since the same quarter one year prior, revenues slightly increased by 7.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Compared to its price level of one year ago, SPH is up 16.68% to its most recent closing price of 45.74. Looking ahead, our view is that this company's fundamentals should 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.
- The net income has decreased by 2.5% when compared to the same quarter one year ago, dropping from -$61.60 million to -$63.12 million.
- Net operating cash flow has significantly decreased to $13.84 million or 63.31% when compared to the same quarter last year.
- The gross profit margin for SUBURBAN PROPANE PRTNRS -LP is currently extremely low, coming in at 4.99%. It has decreased from the same quarter the previous year.
- You can view the full Suburban Propane Partners Ratings Report.
- HGT's very impressive revenue growth greatly exceeded the industry average of 5.4%. Since the same quarter one year prior, revenues leaped by 119.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- HGT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
- 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. In comparison to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, HUGOTON ROYALTY TRUST has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
- HUGOTON ROYALTY TRUST reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, HUGOTON ROYALTY TRUST reported lower earnings of $0.58 versus $1.40 in the prior year.
- HGT has underperformed the S&P 500 Index, declining 6.26% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- You can view the full Hugoton Royalty Ratings Report.
- Since the same quarter one year prior, revenues leaped by 307.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Net operating cash flow has significantly increased by 83.01% to $40.48 million when compared to the same quarter last year.
- The net income increased by 227.6% when compared to the same quarter one year prior, rising from -$23.14 million to $29.52 million.
- ALLIANCEBERNSTEIN HOLDING LP 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ALLIANCEBERNSTEIN HOLDING LP turned its bottom line around by earning $0.50 versus -$0.95 in the prior year. This year, the market expects an improvement in earnings ($1.61 versus $0.50).
- The gross profit margin for ALLIANCEBERNSTEIN HOLDING LP is currently very high, coming in at 100.00%. AB has managed to maintain the strong profit margin since the same quarter of last year.
- You can view the full AllianceBernstein Holding L.P Ratings Report.
- GORO's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, GORO has a quick ratio of 2.13, which demonstrates the ability of the company to cover short-term liquidity needs.
- 41.22% is the gross profit margin for GOLD RESOURCE CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, GORO's net profit margin of -6.22% significantly underperformed when compared to the industry average.
- 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 Metals & Mining industry. The net income has significantly decreased by 126.6% when compared to the same quarter one year ago, falling from $6.87 million to -$1.83 million.
- Net operating cash flow has significantly decreased to -$7.32 million or 378.06% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full Gold Resource Ratings Report.
- Our dividend calendar.