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." New York Community Bancorp (NYSE: NYCB) shares currently have a dividend yield of 6.40%. New York Community Bancorp, Inc. operates as a multi-bank holding company for New York Community Bank and New York Commercial Bank that offer banking products and financial services in New York, New Jersey, Florida, Ohio, and Arizona. The company has a P/E ratio of 14.51. The average volume for New York Community Bancorp has been 2,072,200 shares per day over the past 30 days. New York Community Bancorp has a market cap of $6.8 billion and is part of the banking industry. Shares are down 7.3% year-to-date as of the close of trading on Tuesday. TheStreet Ratings rates New York Community Bancorp as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- Compared to its closing price of one year ago, NYCB's share price has jumped by 25.19%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NYCB should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The gross profit margin for NEW YORK CMNTY BANCORP INC is currently very high, coming in at 72.14%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, NYCB's net profit margin of 25.57% significantly trails the industry average.
- The revenue fell significantly faster than the industry average of 102.3%. Since the same quarter one year prior, revenues slightly dropped by 6.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- NEW YORK CMNTY BANCORP INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, NEW YORK CMNTY BANCORP INC reported lower earnings of $1.08 versus $1.14 in the prior year. For the next year, the market is expecting a contraction of 3.7% in earnings ($1.04 versus $1.08).
- You can view the full New York Community Bancorp Ratings Report.
- MPW's revenue growth has slightly outpaced the industry average of 9.7%. Since the same quarter one year prior, revenues rose by 13.7%. 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 $45.32 million or 49.63% when compared to the same quarter last year. In addition, MEDICAL PROPERTIES TRUST has also vastly surpassed the industry average cash flow growth rate of -0.44%.
- The gross profit margin for MEDICAL PROPERTIES TRUST is rather high; currently it is at 67.69%. Regardless of MPW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MPW's net profit margin of 41.84% significantly outperformed against the industry.
- MEDICAL PROPERTIES TRUST's earnings per share declined by 5.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MEDICAL PROPERTIES TRUST increased its bottom line by earning $0.56 versus $0.13 in the prior year. This year, the market expects an improvement in earnings ($0.75 versus $0.56).
- 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, MEDICAL PROPERTIES TRUST's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Medical Properties Ratings Report.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
- GRMN 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. To add to this, GRMN has a quick ratio of 1.72, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for GARMIN LTD is rather high; currently it is at 56.61%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 29.15% significantly outperformed against the industry average.
- Net operating cash flow has increased to $216.61 million or 31.35% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 19.01%.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Household Durables industry average. The net income increased by 33.7% when compared to the same quarter one year prior, rising from $140.35 million to $187.67 million.
- You can view the full Garmin Ratings Report.
- Our dividend calendar.