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." Navios Maritime Partners L.P (NYSE: NMM) shares currently have a dividend yield of 9.40%. Navios Maritime Partners L.P. is engaged in the ownership and operation of dry cargo vessels in Europe, Asia, North America, and Australia. The company has a P/E ratio of 22.35. The average volume for Navios Maritime Partners L.P has been 666,600 shares per day over the past 30 days. Navios Maritime Partners L.P has a market cap of $1.5 billion and is part of the transportation industry. Shares are down 2.8% year-to-date as of the close of trading on Thursday. TheStreet Ratings rates Navios Maritime Partners L.P as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share. Highlights from the ratings report include:
- Compared to its closing price of one year ago, NMM's share price has jumped by 33.49%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- NMM's debt-to-equity ratio of 0.75 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.38 is very high and demonstrates very strong liquidity.
- The gross profit margin for NAVIOS MARITIME PARTNERS LP is currently very high, coming in at 91.59%. Regardless of NMM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NMM's net profit margin of 19.41% compares favorably to the industry average.
- NMM, with its decline in revenue, underperformed when compared the industry average of 8.9%. Since the same quarter one year prior, revenues slightly dropped by 1.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has significantly decreased to $12.94 million or 79.66% 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 Navios Maritime Partners L.P Ratings Report.
- SO's revenue growth has slightly outpaced the industry average of 3.1%. Since the same quarter one year prior, revenues slightly increased by 6.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Net operating cash flow has significantly increased by 97.42% to $1,686.00 million when compared to the same quarter last year. In addition, SOUTHERN CO has also vastly surpassed the industry average cash flow growth rate of 42.94%.
- SOUTHERN CO has improved earnings per share by 9.3% 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, SOUTHERN CO reported lower earnings of $1.87 versus $2.67 in the prior year. This year, the market expects an improvement in earnings ($2.76 versus $1.87).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Electric Utilities industry. The net income increased by 8.0% when compared to the same quarter one year prior, going from $399.00 million to $431.00 million.
- Even though the current debt-to-equity ratio is 1.16, it is still below the industry average, suggesting that this level of debt is acceptable within the Electric Utilities industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.37 is very low and demonstrates very weak liquidity.
- You can view the full Southern Ratings Report.
- OHI's revenue growth has slightly outpaced the industry average of 6.7%. Since the same quarter one year prior, revenues rose by 15.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- OMEGA HEALTHCARE INVS INC has improved earnings per share by 26.7% 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 two years. We feel that this trend should continue. During the past fiscal year, OMEGA HEALTHCARE INVS INC increased its bottom line by earning $1.46 versus $1.11 in the prior year. This year, the market expects an improvement in earnings ($1.63 versus $1.46).
- 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 39.1% when compared to the same quarter one year prior, rising from $33.92 million to $47.21 million.
- The gross profit margin for OMEGA HEALTHCARE INVS INC is rather high; currently it is at 65.39%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 43.01% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 55.73% to $79.90 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 11.11%.
- You can view the full Omega Healthcare Investors Ratings Report.
- Our dividend calendar.