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."Sun Communities Dividend Yield: 5.10% Sun Communities (NYSE: SUI) shares currently have a dividend yield of 5.10%. Sun Communities, Inc. operates as a real estate investment trust (REIT). It owns, operates, and develops manufactured housing communities in the midwestern, southern, and southeastern United States. The company has a P/E ratio of 116.14. The average volume for Sun Communities has been 173,400 shares per day over the past 30 days. Sun Communities has a market cap of $2.1 billion and is part of the real estate industry. Shares are up 19.4% year-to-date as of the close of trading on Monday. 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 Sun Communities as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in stock price during the past year and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins and weak operating cash flow. Highlights from the ratings report include:
- SUI's revenue growth has slightly outpaced the industry average of 11.6%. Since the same quarter one year prior, revenues rose by 15.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- The gross profit margin for SUN COMMUNITIES INC is rather low; currently it is at 22.06%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 5.56% significantly trails the industry average.
- Net operating cash flow has declined marginally to $32.44 million or 1.12% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full Sun Communities Ratings Report.
- VGR's very impressive revenue growth greatly exceeded the industry average of 0.5%. Since the same quarter one year prior, revenues leaped by 106.7%. 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.
- Net operating cash flow has significantly increased by 516.13% to $93.08 million when compared to the same quarter last year. In addition, VECTOR GROUP LTD has also vastly surpassed the industry average cash flow growth rate of -30.84%.
- Compared to its closing price of one year ago, VGR's share price has jumped by 45.77%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- 44.72% is the gross profit margin for VECTOR GROUP LTD which we consider to be strong. Regardless of VGR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VGR's net profit margin of 2.66% is significantly lower than 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 Tobacco industry. The net income has significantly decreased by 41.3% when compared to the same quarter one year ago, falling from $13.51 million to $7.93 million.
- You can view the full Vector Group Ratings Report.
- CLMT's revenue growth has slightly outpaced the industry average of 3.5%. Since the same quarter one year prior, revenues slightly increased by 6.0%. 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.
- The share price of CALUMET SPECIALTY PRODS -LP has not done very well: it is down 6.44% 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. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- CALUMET SPECIALTY PRODS -LP 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. 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, CALUMET SPECIALTY PRODS -LP swung to a loss, reporting -$0.10 versus $3.53 in the prior year. For the next year, the market is expecting a contraction of 230.0% in earnings (-$0.33 versus -$0.10).
- The gross profit margin for CALUMET SPECIALTY PRODS -LP is currently extremely low, coming in at 9.37%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.57% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$103.70 million or 251.38% 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 Calumet Specialty Products Partners Ratings Report.
- Our dividend calendar.