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." Canadian Imperial Bank of Commerce (NYSE: CM) shares currently have a dividend yield of 4.10%. Canadian Imperial Bank of Commerce, a diversified financial institution, provides various financial products and services to individuals, small businesses, and commercial, corporate, and institutional clients in Canada and internationally. The company has a P/E ratio of 12.66. The average volume for Canadian Imperial Bank of Commerce has been 147,700 shares per day over the past 30 days. Canadian Imperial Bank of Commerce has a market cap of $36.2 billion and is part of the banking industry. Shares are up 6.5% year-to-date as of the close of trading on Monday. TheStreet Ratings rates Canadian Imperial Bank of Commerce as a hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins, solid stock price performance and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and weak operating cash flow. Highlights from the ratings report include:
- The gross profit margin for CANADIAN IMPERIAL BANK is currently very high, coming in at 72.28%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CM's net profit margin of 7.76% significantly trails the industry average.
- CM's share price has surged by 25.48% over the past year, reflecting the market's general trend, despite their weak earnings growth during the last quarter. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 2.7%. Since the same quarter one year prior, revenues slightly dropped by 2.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Commercial Banks industry. The net income has significantly decreased by 63.1% when compared to the same quarter one year ago, falling from $860.00 million to $317.00 million.
- Net operating cash flow has significantly decreased to -$2,201.00 million or 1036.59% 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 Canadian Imperial Bank of Commerce Ratings Report.
- Compared to its closing price of one year ago, TEF's share price has jumped by 33.12%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Diversified Telecommunication Services industry and the overall market on the basis of return on equity, TELEFONICA SA has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- Although TEF's debt-to-equity ratio of 2.61 is very high, it is currently less than that of the industry average. Along with the unfavorable debt-to-equity ratio, TEF maintains a poor quick ratio of 0.72, which illustrates the inability to avoid short-term cash problems.
- The gross profit margin for TELEFONICA SA is currently lower than what is desirable, coming in at 30.12%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 5.65% trails that of the industry average.
- You can view the full Telefonica Ratings Report.
- PENNSYLVANIA RE INVS TRUST has improved earnings per share by 18.2% 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. This trend suggests that the performance of the business is improving. During the past fiscal year, PENNSYLVANIA RE INVS TRUST continued to lose money by earning -$0.58 versus -$0.91 in the prior year. This year, the market expects an improvement in earnings (-$0.21 versus -$0.58).
- 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 4.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for PENNSYLVANIA RE INVS TRUST is currently extremely low, coming in at 10.57%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -7.24% is significantly below that of the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 132.7% when compared to the same quarter one year ago, falling from $24.80 million to -$8.10 million.
- You can view the full Pennsylvania Real Estate Investment Ratings Report.
- Our dividend calendar.