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."Knightsbridge Shipping Dividend Yield: 10.00% Knightsbridge Shipping (NASDAQ: VLCCF) shares currently have a dividend yield of 10.00%. Knightsbridge Shipping Limited, a shipping company, engages in the seaborne transportation of dry bulk cargoes worldwide. As of October 7, 2014, it owned and operated a fleet of 27 Capesize dry bulk carriers. The company has a P/E ratio of 57.29. The average volume for Knightsbridge Shipping has been 885,100 shares per day over the past 30 days. Knightsbridge Shipping has a market cap of $642.6 million and is part of the transportation industry. Shares are down 5.5% year-to-date as of the close of trading on Tuesday. 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 Knightsbridge Shipping as a hold. 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 and compelling growth in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. Highlights from the ratings report include:
- VLCCF's very impressive revenue growth greatly exceeded the industry average of 10.7%. Since the same quarter one year prior, revenues leaped by 168.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- VLCCF's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- KNIGHTSBRIDGE SHIPPING LTD 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, KNIGHTSBRIDGE SHIPPING LTD reported lower earnings of $0.11 versus $0.25 in the prior year. This year, the market expects an improvement in earnings ($0.20 versus $0.11).
- 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 Marine industry and the overall market on the basis of return on equity, KNIGHTSBRIDGE SHIPPING LTD underperformed against that of the industry average and is significantly less than that of the S&P 500.
- VLCCF has underperformed the S&P 500 Index, declining 8.18% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- You can view the full Knightsbridge Shipping Ratings Report.
- Despite its growing revenue, the company underperformed as compared with the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 0.3%. 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.
- MSB 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. To add to this, MSB has a quick ratio of 1.84, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for MESABI TRUST is currently very high, coming in at 100.00%. MSB has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, MSB's net profit margin of 94.38% significantly outperformed against the industry.
- 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 Metals & Mining industry average. The net income has decreased by 2.7% when compared to the same quarter one year ago, dropping from $7.63 million to $7.42 million.
- Net operating cash flow has decreased to $3.96 million or 33.39% 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 Mesabi Ratings Report.
- The revenue growth came in higher than the industry average of 2.7%. Since the same quarter one year prior, revenues slightly increased by 9.5%. 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 slightly increased to $30.65 million or 5.60% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -6.28%.
- The gross profit margin for EV ENERGY PARTNERS LP is rather high; currently it is at 65.31%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -10.09% is in-line with the industry average.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, EV ENERGY PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
- 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 127.5% when compared to the same quarter one year ago, falling from $32.85 million to -$9.02 million.
- You can view the full EV Energy Partners Ratings Report.
- Our dividend calendar.