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." One Liberty Properties (NYSE: OLP) shares currently have a dividend yield of 7.10%. One Liberty Properties, Inc., a real estate investment trust (REIT), engages in the acquisition, ownership, and management of commercial real estate properties in the United States. The company has a P/E ratio of 18.86. The average volume for One Liberty Properties has been 34,800 shares per day over the past 30 days. One Liberty Properties has a market cap of $324.6 million and is part of the real estate industry. Shares are up 3.6% year-to-date as of the close of trading on Wednesday. TheStreet Ratings rates One Liberty Properties as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- OLP's revenue growth has slightly outpaced the industry average of 9.6%. Since the same quarter one year prior, revenues rose by 15.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- Net operating cash flow has increased to $6.46 million or 27.28% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 8.56%.
- The gross profit margin for ONE LIBERTY PROPERTIES INC is rather high; currently it is at 51.88%. Regardless of OLP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OLP's net profit margin of 24.06% compares favorably to the industry average.
- ONE LIBERTY PROPERTIES 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. During the past fiscal year, ONE LIBERTY PROPERTIES INC's EPS of $0.80 remained unchanged from the prior years' EPS of $0.80.
- You can view the full One Liberty Properties Ratings Report.