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." American Campus Communities Dividend Yield: 4.20% American Campus Communities (NYSE: ACC) shares currently have a dividend yield of 4.20%. American Campus Communities, Inc. is an independent equity real estate investment trust. The firm invests in the real estate markets of the United States. It primarily engages in developing, owning, and managing high-quality student housing communities. The company has a P/E ratio of 64.18. The average volume for American Campus Communities has been 607,400 shares per day over the past 30 days. American Campus Communities has a market cap of $3.8 billion and is part of the real estate industry. Shares are up 13% 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 American Campus Communities as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and compelling growth in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall. Highlights from the ratings report include:
- ACC's revenue growth has slightly outpaced the industry average of 11.6%. Since the same quarter one year prior, revenues rose by 12.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Net operating cash flow has increased to $52.21 million or 14.17% when compared to the same quarter last year. Despite an increase in cash flow, AMERICAN CAMPUS COMMUNITIES's average is still marginally south of the industry average growth rate of 19.03%.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, AMERICAN CAMPUS COMMUNITIES underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for AMERICAN CAMPUS COMMUNITIES is rather low; currently it is at 21.08%. Regardless of ACC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, ACC's net profit margin of 7.76% is significantly lower than the industry average.
- You can view the full American Campus Communities Ratings Report.