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." TCP Capital (NASDAQ: TCPC) shares currently have a dividend yield of 8.60%. TCP Capital Corp. is a business development company specializing in investments in debt securities of public and private middle market companies. It invests primarily in senior debt instruments and may also consider secondary-market investment opportunities. The company has a P/E ratio of 6.27. The average volume for TCP Capital has been 297,500 shares per day over the past 30 days. TCP Capital has a market cap of $521.5 million and is part of the financial services industry. Shares are up 14% year-to-date as of the close of trading on Friday. TheStreet Ratings rates TCP Capital as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share and compelling growth in net income. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 8.7%. Since the same quarter one year prior, revenues rose by 42.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- TCP CAPITAL CORP has improved earnings per share by 9.1% in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($1.63 versus $1.20).
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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.
- When compared to other companies in the Capital Markets industry and the overall market, TCP CAPITAL CORP's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$132.29 million or 481.14% 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 TCP Capital Ratings Report.
- The gross profit margin for CAPITOL FEDERAL FINL INC is rather high; currently it is at 64.20%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CFFN's net profit margin of 20.60% significantly trails the industry average.
- CAPITOL FEDERAL FINL INC reported flat earnings per share in the most recent quarter. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, CAPITOL FEDERAL FINL INC increased its bottom line by earning $0.48 versus $0.47 in the prior year. This year, the market expects an improvement in earnings ($0.52 versus $0.48).
- The revenue fell significantly faster than the industry average of 100.3%. Since the same quarter one year prior, revenues slightly dropped by 8.4%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- Net operating cash flow has declined marginally to $27.15 million or 7.25% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- 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 Thrifts & Mortgage Finance industry. The net income has decreased by 9.4% when compared to the same quarter one year ago, dropping from $17.74 million to $16.07 million.
- You can view the full Capitol Federal Financial Ratings Report.
- This stock has managed to rise its share value by 67.05% over the past twelve months. Although BGCP had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- 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 5715.5% when compared to the same quarter one year prior, rising from -$0.45 million to $25.33 million.
- Net operating cash flow has significantly increased by 252.14% to $42.54 million when compared to the same quarter last year. Despite an increase in cash flow, BGC PARTNERS INC's cash flow growth rate is still lower than the industry average growth rate of 269.01%.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 8.7%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for BGC PARTNERS INC is rather low; currently it is at 15.27%. Regardless of BGCP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.84% trails the industry average.
- You can view the full BGC Partners Ratings Report.
- NRT's revenue growth has slightly outpaced the industry average of 5.5%. Since the same quarter one year prior, revenues slightly increased by 3.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income increased by 3.8% when compared to the same quarter one year prior, going from $4.68 million to $4.86 million.
- NORTH EUROPEAN OIL RTY TR's earnings per share improvement from the most recent quarter was slightly positive. 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, NORTH EUROPEAN OIL RTY TR reported lower earnings of $2.26 versus $2.46 in the prior year.
- NRT has underperformed the S&P 500 Index, declining 13.22% 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 North European Oil Royalty Ratings Report.
- Our dividend calendar.