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 "Hold." CBL & Associates Properties (NYSE: CBL) shares currently have a dividend yield of 5.30%. CBL & Associates Properties, Inc. is a public real estate investment trust. It engages in acquisition, development, and management of properties. The fund invests in the real estate markets of United States. Its portfolio consists of enclosed malls and open-air centers. The company has a P/E ratio of 44.40. The average volume for CBL & Associates Properties has been 1,670,300 shares per day over the past 30 days. CBL & Associates Properties has a market cap of $3.2 billion and is part of the real estate industry. Shares are up 2.9% year-to-date as of the close of trading on Monday. TheStreet Ratings rates CBL & Associates Properties as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 82.4% when compared to the same quarter one year prior, rising from $30.31 million to $55.29 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.3%. Since the same quarter one year prior, revenues slightly increased by 1.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Net operating cash flow has increased to $86.95 million or 28.79% when compared to the same quarter last year. Despite an increase in cash flow, CBL & ASSOCIATES PPTYS INC's average is still marginally south of the industry average growth rate of 30.47%.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CBL & ASSOCIATES PPTYS INC's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for CBL & ASSOCIATES PPTYS INC is currently lower than what is desirable, coming in at 30.54%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 20.75% trails that of the industry average.
- You can view the full CBL & Associates Properties Ratings Report.