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." Ryman Hospitality Properties (NYSE: RHP) shares currently have a dividend yield of 4.40%. Ryman Hospitality Properties, Inc. owns and operates hotels in the United States. The company has a P/E ratio of 37.59. The average volume for Ryman Hospitality Properties has been 484,600 shares per day over the past 30 days. Ryman Hospitality Properties has a market cap of $2.5 billion and is part of the real estate industry. Shares are up 19.4% year-to-date as of the close of trading on Wednesday. TheStreet Ratings rates Ryman Hospitality Properties as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- RHP's revenue growth has slightly outpaced the industry average of 10.3%. Since the same quarter one year prior, revenues rose by 10.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, RHP's share price has jumped by 34.86%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- Net operating cash flow has significantly increased by 163.65% to $29.83 million when compared to the same quarter last year. In addition, RYMAN HOSPITALITY PPTYS INC has also vastly surpassed the industry average cash flow growth rate of 29.73%.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, RYMAN HOSPITALITY PPTYS INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- RYMAN HOSPITALITY PPTYS INC 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, RYMAN HOSPITALITY PPTYS INC turned its bottom line around by earning $1.77 versus -$0.60 in the prior year. For the next year, the market is expecting a contraction of 10.4% in earnings ($1.59 versus $1.77).
- You can view the full Ryman Hospitality Properties Ratings Report.
- PINNACLE WEST CAPITAL CORP's earnings per share declined by 36.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PINNACLE WEST CAPITAL CORP increased its bottom line by earning $3.66 versus $3.50 in the prior year. This year, the market expects an improvement in earnings ($3.68 versus $3.66).
- The debt-to-equity ratio is somewhat low, currently at 0.85, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.25 is very weak and demonstrates a lack of ability to pay short-term obligations.
- Net operating cash flow has increased to $249.16 million or 17.43% when compared to the same quarter last year. Despite an increase in cash flow, PINNACLE WEST CAPITAL CORP's average is still marginally south of the industry average growth rate of 18.73%.
- PNW, with its decline in revenue, underperformed when compared the industry average of 10.4%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- You can view the full Pinnacle West Capital Ratings Report.
- The gross profit margin for PPL CORP is currently very high, coming in at 85.64%. It has increased significantly from the same period last year. Along with this, the net profit margin of 24.53% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 281.55% to $931.00 million when compared to the same quarter last year. In addition, PPL CORP has also vastly surpassed the industry average cash flow growth rate of 18.73%.
- PPL CORP's earnings per share declined by 24.6% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, PPL CORP reported lower earnings of $1.74 versus $2.61 in the prior year. This year, the market expects an improvement in earnings ($2.23 versus $1.74).
- The revenue fell significantly faster than the industry average of 10.4%. Since the same quarter one year prior, revenues fell by 47.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full PPL Ratings Report.
- Our dividend calendar.