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 4.80%. 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 1,379,000 shares per day over the past 30 days. BioMed Realty has a market cap of $4.0 billion and is part of the real estate industry. Shares are up 14.5% 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 6.7%. 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 ($0.23 versus $0.20).
- The net income growth from the same quarter one year ago has significantly exceeded that of the Real Estate Investment Trusts (REITs) industry average, but is less than that of the S&P 500. 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. In addition, BIOMED REALTY TRUST INC has also modestly surpassed the industry average cash flow growth rate of 11.11%.
- You can view the full BioMed Realty Ratings Report.
- The revenue growth greatly exceeded the industry average of 7.6%. Since the same quarter one year prior, revenues rose by 29.5%. 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.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CVR ENERGY INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- Net operating cash flow has significantly increased by 660.95% to $118.80 million when compared to the same quarter last year. In addition, CVR ENERGY INC has also vastly surpassed the industry average cash flow growth rate of -22.97%.
- Despite currently having a low debt-to-equity ratio of 0.57, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that CVI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.18 is high and demonstrates strong liquidity.
- You can view the full CVR Energy Ratings Report.
- BX's very impressive revenue growth greatly exceeded the industry average of 7.3%. Since the same quarter one year prior, revenues leaped by 122.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 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, BLACKSTONE GROUP LP's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for BLACKSTONE GROUP LP is rather high; currently it is at 54.13%. It has increased significantly from the same period last year. Along with this, the net profit margin of 22.92% is above that of the industry average.
- Net operating cash flow has significantly increased by 259.44% to $815.24 million when compared to the same quarter last year. In addition, BLACKSTONE GROUP LP has also vastly surpassed the industry average cash flow growth rate of 130.08%.
- Powered by its strong earnings growth of 447.36% and other important driving factors, this stock has surged by 47.89% 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, BX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- You can view the full Blackstone Group Ratings Report.
- Our dividend calendar.