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." Lamar Advertising Dividend Yield: 6.80% Lamar Advertising (NASDAQ: LAMR) shares currently have a dividend yield of 6.80%. Lamar Advertising Company operates as an outdoor advertising company in the United States. The company has a P/E ratio of 121.92. The average volume for Lamar Advertising has been 1,276,200 shares per day over the past 30 days. Lamar Advertising has a market cap of $3.9 billion and is part of the media industry. Shares are down 5.7% 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 Lamar Advertising as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.1%. Since the same quarter one year prior, revenues slightly increased by 0.8%. 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 increased to $110.85 million or 10.59% when compared to the same quarter last year. In addition, LAMAR ADVERTISING CO has also modestly surpassed the industry average cash flow growth rate of 5.77%.
- LAMAR ADVERTISING CO's earnings per share declined by 33.3% 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, LAMAR ADVERTISING CO increased its bottom line by earning $0.42 versus $0.10 in the prior year. This year, the market expects an improvement in earnings ($0.86 versus $0.42).
- The gross profit margin for LAMAR ADVERTISING CO is rather high; currently it is at 65.42%. Regardless of LAMR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.66% trails the industry average.
- 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 Media industry and the overall market on the basis of return on equity, LAMAR ADVERTISING CO underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full Lamar Advertising Ratings Report.