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."New York Community Bancorp (NYSE: NYCB) shares currently have a dividend yield of 6.50%. 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 14.36. The average volume for New York Community Bancorp has been 2,657,400 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 9.1% year-to-date as of the close of trading on Wednesday. TheStreet Ratings rates New York Community Bancorp as a buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- The gross profit margin for NEW YORK CMNTY BANCORP INC is currently very high, coming in at 74.25%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.46% is above that of the industry average.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
- NYCB, with its decline in revenue, slightly underperformed the industry average of 1.0%. Since the same quarter one year prior, revenues slightly dropped by 7.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Net operating cash flow has significantly decreased to $188.10 million or 70.23% when compared to the same quarter last year. Despite a decrease in cash flow of 70.23%, NEW YORK CMNTY BANCORP INC is in line with the industry average cash flow growth rate of -73.18%.
- You can view the full New York Community Bancorp Ratings Report.
- The revenue growth came in higher than the industry average of 2.2%. Since the same quarter one year prior, revenues rose by 19.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- UNITED BANKSHARES INC/WV has improved earnings per share by 11.6% 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, UNITED BANKSHARES INC/WV increased its bottom line by earning $1.70 versus $1.64 in the prior year. This year, the market expects an improvement in earnings ($1.90 versus $1.70).
- 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 Commercial Banks industry average. The net income increased by 39.6% when compared to the same quarter one year prior, rising from $21.58 million to $30.12 million.
- The gross profit margin for UNITED BANKSHARES INC/WV is currently very high, coming in at 87.10%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 26.72% trails the industry average.
- You can view the full United Bankshares Ratings Report.
- The revenue growth greatly exceeded the industry average of 3.0%. Since the same quarter one year prior, revenues rose by 43.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- VANGUARD NATURAL RESOURCES 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, VANGUARD NATURAL RESOURCES turned its bottom line around by earning $0.75 versus -$2.76 in the prior year. This year, the market expects an improvement in earnings ($1.43 versus $0.75).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 155.9% when compared to the same quarter one year prior, rising from -$27.02 million to $15.12 million.
- The gross profit margin for VANGUARD NATURAL RESOURCES is rather high; currently it is at 53.00%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.63% is above that of the industry average.
- Net operating cash flow has increased to $79.66 million or 36.77% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 17.08%.
- You can view the full Vanguard Natural Resources Ratings Report.
- Our dividend calendar.