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 6.30%. 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 14.89. The average volume for New York Community Bancorp has been 2,283,500 shares per day over the past 30 days. New York Community Bancorp has a market cap of $7.1 billion and is part of the banking industry. Shares are down 4.8% 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 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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 0.0%. 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.
- NEW YORK CMNTY BANCORP INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, NEW YORK CMNTY BANCORP INC reported lower earnings of $1.08 versus $1.14 in the prior year. For the next year, the market is expecting a contraction of 2.8% in earnings ($1.05 versus $1.08).
- You can view the full New York Community Bancorp Ratings Report.