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."Permian Basin Royalty Dividend Yield: 9.30% Permian Basin Royalty (NYSE: PBT) shares currently have a dividend yield of 9.30%. Permian Basin Royalty Trust owns overriding royalty interests in various oil and gas properties in the United States. The company has a P/E ratio of 13.38. The average volume for Permian Basin Royalty has been 128,900 shares per day over the past 30 days. Permian Basin Royalty has a market cap of $654.9 million and is part of the energy industry. Shares are up 8.9% 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 Permian Basin Royalty as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, compelling growth in net income and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 31.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- PBT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.17, which illustrates the ability to avoid short-term cash problems.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PERMIAN BASIN ROYALTY TRUST's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Oil, Gas & Consumable Fuels industry average. The net income increased by 33.0% when compared to the same quarter one year prior, rising from $10.62 million to $14.13 million.
- The gross profit margin for PERMIAN BASIN ROYALTY TRUST is currently very high, coming in at 100.00%. PBT has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, PBT's net profit margin of 96.70% significantly outperformed against the industry.
- You can view the full Permian Basin Royalty Ratings Report.
- OMAB's revenue growth has slightly outpaced the industry average of 13.6%. 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.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Transportation Infrastructure industry and the overall market, GRUPO AEROPORTUARIO DEL CENT's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- The gross profit margin for GRUPO AEROPORTUARIO DEL CENT is rather high; currently it is at 63.88%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.93% is above that of the industry average.
- Net operating cash flow has significantly increased by 65.54% to $30.27 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 54.06%.
- You can view the full Grupo Aeroportuario del Centro Norte SAB de Ratings Report.
- The revenue growth greatly exceeded the industry average of 2.5%. Since the same quarter one year prior, revenues rose by 33.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 265.2% when compared to the same quarter one year prior, rising from -$6.52 million to $10.77 million.
- Net operating cash flow has significantly increased by 108.67% to $2.64 million when compared to the same quarter last year. In addition, GLADSTONE INVESTMENT CORP/DE has also vastly surpassed the industry average cash flow growth rate of -89.07%.
- The gross profit margin for GLADSTONE INVESTMENT CORP/DE is rather high; currently it is at 66.73%. Regardless of GAIN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GAIN's net profit margin of 109.48% significantly outperformed against the industry.
- GLADSTONE INVESTMENT CORP/DE reported significant earnings per share improvement 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, GLADSTONE INVESTMENT CORP/DE swung to a loss, reporting -$0.06 versus $0.63 in the prior year. This year, the market expects an improvement in earnings ($0.72 versus -$0.06).
- You can view the full Gladstone Investment Corporation Ratings Report.
- Our dividend calendar.