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 "Buy." Navios Maritime Partners L.P (NYSE: NMM) shares currently have a dividend yield of 10.80%. Navios Maritime Partners L.P. engages in the ownership and operation of dry cargo vessels in Europe, Asia, North America, and Australia. The company has a P/E ratio of 11.91. The average volume for Navios Maritime Partners L.P has been 500,400 shares per day over the past 30 days. Navios Maritime Partners L.P has a market cap of $1.2 billion and is part of the transportation industry. Shares are up 33.9% year to date as of the close of trading on Tuesday. TheStreet Ratings rates Navios Maritime Partners L.P as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- The gross profit margin for NAVIOS MARITIME PARTNERS LP is currently very high, coming in at 91.87%. Regardless of NMM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NMM's net profit margin of 28.17% significantly outperformed against the industry.
- 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.
- Despite currently having a low debt-to-equity ratio of 0.47, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 5.74 is very high and demonstrates very strong liquidity.
- NMM, with its decline in revenue, underperformed when compared the industry average of 8.8%. Since the same quarter one year prior, revenues fell by 16.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- NAVIOS MARITIME PARTNERS LP's earnings per share declined by 45.9% 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, NAVIOS MARITIME PARTNERS LP increased its bottom line by earning $1.64 versus $1.19 in the prior year. For the next year, the market is expecting a contraction of 49.4% in earnings ($0.83 versus $1.64).
- You can view the full Navios Maritime Partners L.P Ratings Report.
- GAIN's very impressive revenue growth greatly exceeded the industry average of 8.7%. Since the same quarter one year prior, revenues leaped by 62.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 4344.0% when compared to the same quarter one year prior, rising from -$0.35 million to $14.94 million.
- The gross profit margin for GLADSTONE INVESTMENT CORP/DE is rather high; currently it is at 68.60%. Regardless of GAIN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GAIN's net profit margin of 131.51% significantly outperformed against the industry.
- Net operating cash flow has significantly increased by 179.43% to $33.90 million when compared to the same quarter last year. Despite an increase in cash flow of 179.43%, GLADSTONE INVESTMENT CORP/DE is still growing at a significantly lower rate than the industry average of 272.26%.
- 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. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, GLADSTONE INVESTMENT CORP/DE has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- You can view the full Gladstone Investment Corporation Ratings Report.
- HTGC's very impressive revenue growth greatly exceeded the industry average of 8.7%. Since the same quarter one year prior, revenues leaped by 71.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Capital Markets industry and the overall market, HERCULES TECH GROWTH CAP INC's return on equity exceeds that of both the industry average and the S&P 500.
- Powered by its strong earnings growth of 555.55% and other important driving factors, this stock has surged by 60.09% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HTGC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 679.4% when compared to the same quarter one year prior, rising from $4.75 million to $36.98 million.
- Net operating cash flow has significantly increased by 313.98% to $98.25 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 272.26%.
- You can view the full Hercules Technology Growth Capital Ratings Report.
- Our dividend calendar.