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." America First Multifamily Investors Dividend Yield: 8.30% America First Multifamily Investors (NASDAQ: ATAX) shares currently have a dividend yield of 8.30%. America First Multifamily Investors, L.P. acquires, holds, sells, and deals in a portfolio of mortgage revenue bonds that have been issued to provide construction and/or permanent financing of multifamily residential apartments. The company has a P/E ratio of 25.12. The average volume for America First Multifamily Investors has been 96,800 shares per day over the past 30 days. America First Multifamily Investors has a market cap of $363.3 million and is part of the real estate industry. Shares are down 4.1% year-to-date as of the close of trading on Friday. 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 America First Multifamily Investors as a hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins, good cash flow from operations and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity. Highlights from the ratings report include:
- The gross profit margin for AMERICA FIRST MULTIFAMILY-LP is currently very high, coming in at 79.83%. Regardless of ATAX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ATAX's net profit margin of 32.50% significantly outperformed against the industry.
- Net operating cash flow has significantly increased by 60.36% to $4.59 million when compared to the same quarter last year. Despite an increase in cash flow of 60.36%, AMERICA FIRST MULTIFAMILY-LP is still growing at a significantly lower rate than the industry average of 118.47%.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Thrifts & Mortgage Finance industry average. The net income has decreased by 7.5% when compared to the same quarter one year ago, dropping from $3.96 million to $3.66 million.
- The share price of AMERICA FIRST MULTIFAMILY-LP has not done very well: it is down 13.78% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- You can view the full America First Multifamily Investors Ratings Report.