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 "Sell." Brookfield Property Partners (NYSE: BPY) shares currently have a dividend yield of 5.10%. Brookfield Property Partners L.P. owns, operates, and invests in commercial properties in North America, Europe, Australia, and Brazil. The company has a P/E ratio of 13.79. The average volume for Brookfield Property Partners has been 815,000 shares per day over the past 30 days. Brookfield Property Partners has a market cap of $2.0 billion and is part of the real estate industry. Shares are down 3.3% year-to-date as of the close of trading on Tuesday. TheStreet Ratings rates Brookfield Property Partners as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share and generally high debt management risk. Highlights from the ratings report include:
- BROOKFIELD PROPERTY PRTRS LP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago.
- The debt-to-equity ratio is very high at 4.78 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- Despite the weak revenue results, BPY has significantly outperformed against the industry average of 37.9%. Since the same quarter one year prior, revenues slightly dropped by 6.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The share price of BROOKFIELD PROPERTY PRTRS LP has not done very well: it is down 13.42% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter.
- The net income growth from the same quarter one year ago has exceeded that of the Real Estate Management & Development industry average, but is less than that of the S&P 500. The net income increased by 13.1% when compared to the same quarter one year prior, going from $329.00 million to $372.00 million.
- You can view the full Brookfield Property Partners Ratings Report.