Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.
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 which could 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."BioMed Realty (NYSE: BMR) shares currently have a dividend yield of 5.00%. BioMed Realty Trust, Inc. operates as a real estate investment trust (REIT) that focuses on providing real estate to the life science industry in the United States. The company has a P/E ratio of 102.60. The average volume for BioMed Realty has been 1,324,600 shares per day over the past 30 days. BioMed Realty has a market cap of $3.9 billion and is part of the real estate industry. Shares are up 9.8% year-to-date as of the close of trading on Wednesday. TheStreet Ratings rates BioMed Realty as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins. Highlights from the ratings report include:
- BMR's revenue growth has slightly outpaced the industry average of 6.8%. Since the same quarter one year prior, revenues slightly increased by 10.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- BIOMED REALTY TRUST INC 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. During the past fiscal year, BIOMED REALTY TRUST INC increased its bottom line by earning $0.20 versus $0.01 in the prior year. This year, the market expects an improvement in earnings ($0.22 versus $0.20).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income increased by 25.8% when compared to the same quarter one year prior, rising from $8.17 million to $10.28 million.
- Net operating cash flow has increased to $75.09 million or 20.71% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 10.27%.
- You can view the full BioMed Realty Ratings Report.
- Despite its growing revenue, the company underperformed as compared with the industry average of 3.6%. Since the same quarter one year prior, revenues slightly increased by 2.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- 42.96% is the gross profit margin for SHAW COMMUNICATIONS INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.12% is above that of the industry average.
- Net operating cash flow has significantly increased by 1313.79% to $410.00 million when compared to the same quarter last year. In addition, SHAW COMMUNICATIONS INC has also vastly surpassed the industry average cash flow growth rate of -11.84%.
- SHAW COMMUNICATIONS INC's earnings per share improvement from the most recent quarter was slightly positive. 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, SHAW COMMUNICATIONS INC increased its bottom line by earning $1.63 versus $1.62 in the prior year.
- You can view the full Shaw Communications Ratings Report.
- POM's revenue growth has slightly outpaced the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 3.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- PEPCO HOLDINGS INC reported significant earnings per share improvement 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, PEPCO HOLDINGS INC reported lower earnings of $0.34 versus $0.95 in the prior year. This year, the market expects an improvement in earnings ($1.21 versus $0.34).
- Net operating cash flow has increased to $230.00 million or 32.94% when compared to the same quarter last year. Despite an increase in cash flow, PEPCO HOLDINGS INC's cash flow growth rate is still lower than the industry average growth rate of 43.18%.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Electric Utilities industry average, but is greater than that of the S&P 500. The net income increased by 34.9% when compared to the same quarter one year prior, rising from $43.00 million to $58.00 million.
- The gross profit margin for PEPCO HOLDINGS INC is currently lower than what is desirable, coming in at 25.66%. Regardless of POM'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 5.31% trails the industry average.
- You can view the full Pepco Holdings Ratings Report.
- Our dividend calendar.