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 "Sell."Brookfield Property Partners (NYSE: BPY) shares currently have a dividend yield of 4.70%. Brookfield Property Partners L.P. owns, operates, and invests in commercial properties in North America, Europe, Australia, and Brazil. The company has a P/E ratio of 9.53. The average volume for Brookfield Property Partners has been 699,200 shares per day over the past 30 days. Brookfield Property Partners has a market cap of $4.3 billion and is part of the real estate industry. Shares are up 7.1% year-to-date as of the close of trading on Wednesday. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. TheStreet Ratings rates Brookfield Property Partners as a sell. The area that we feel has been the company's primary weakness has been its relatively poor performance when compared with the S&P 500 during the past year. Highlights from the ratings report include:
- In its most recent trading session, BPY has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- Compared to other companies in the Real Estate Management & Development industry and the overall market, BROOKFIELD PROPERTY PRTRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for BROOKFIELD PROPERTY PRTRS LP is rather high; currently it is at 56.13%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.22% significantly outperformed against the industry average.
- BROOKFIELD PROPERTY PRTRS LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Management & Development industry. The net income increased by 609.4% when compared to the same quarter one year prior, rising from -$53.00 million to $270.00 million.
- You can view the full Brookfield Property Partners Ratings Report.
- NEW RESIDENTIAL INV CP's earnings per share improvement from the most recent quarter was slightly positive. For the next year, the market is expecting a contraction of 28.6% in earnings ($0.70 versus $0.98).
- NRZ has underperformed the S&P 500 Index, declining 8.33% from its price level of one year ago.
- The gross profit margin for NEW RESIDENTIAL INV CP is currently very high, coming in at 88.95%. Regardless of NRZ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NRZ's net profit margin of 45.75% significantly outperformed against the industry.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry average. The net income increased by 13.1% when compared to the same quarter one year prior, going from $109.22 million to $123.50 million.
- You can view the full New Residential Investment Ratings Report.
- 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 Energy Equipment & Services industry. The net income has significantly decreased by 36.3% when compared to the same quarter one year ago, falling from $31.10 million to $19.80 million.
- The debt-to-equity ratio is very high at 4.53 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, SDLP's quick ratio is somewhat strong at 1.02, demonstrating the ability to handle short-term liquidity needs.
- SEADRILL PARTNERS LLC 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 not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, SEADRILL PARTNERS LLC increased its bottom line by earning $2.29 versus $1.52 in the prior year.
- Compared to where it was a year ago, the stock is now trading at a higher level, and has traded in line with the S&P 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- The gross profit margin for SEADRILL PARTNERS LLC is rather high; currently it is at 64.18%. 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 7.19% trails the industry average.
- You can view the full Seadrill Partners Ratings Report.
- Our dividend calendar.