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."America First Multifamily Investors Dividend Yield: 8.80% America First Multifamily Investors (NASDAQ: ATAX) shares currently have a dividend yield of 8.80%. America First Multifamily Investors, L.P. acquires, holds, sells, and deals in a portfolio of mortgage revenue bonds that have been issued to provide construction and/or permanent financing of multifamily residential apartments. The company has a P/E ratio of 23.75. The average volume for America First Multifamily Investors has been 125,400 shares per day over the past 30 days. America First Multifamily Investors has a market cap of $343.4 million and is part of the real estate industry. Shares are down 8.1% year-to-date as of the close of trading on Thursday. 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 America First Multifamily Investors as a hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins, good cash flow from operations and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity. Highlights from the ratings report include:
- The gross profit margin for AMERICA FIRST MULTIFAMILY-LP is currently very high, coming in at 79.83%. Regardless of ATAX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ATAX's net profit margin of 32.50% significantly outperformed against the industry.
- Net operating cash flow has significantly increased by 60.36% to $4.59 million when compared to the same quarter last year. Despite an increase in cash flow of 60.36%, AMERICA FIRST MULTIFAMILY-LP is still growing at a significantly lower rate than the industry average of 173.22%.
- 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 Thrifts & Mortgage Finance industry average. The net income has decreased by 7.5% when compared to the same quarter one year ago, dropping from $3.96 million to $3.66 million.
- The share price of AMERICA FIRST MULTIFAMILY-LP has not done very well: it is down 16.98% 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. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- You can view the full America First Multifamily Investors Ratings Report.
- STON's revenue growth has slightly outpaced the industry average of 6.3%. Since the same quarter one year prior, revenues rose by 14.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for STONEMOR PARTNERS LP is rather high; currently it is at 51.44%. 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 -0.16% is in-line with the industry average.
- Net operating cash flow has remained constant at $9.69 million with no significant change when compared to the same quarter last year. In addition, STONEMOR PARTNERS LP has modestly surpassed the industry average cash flow growth rate of -4.68%.
- 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 Diversified Consumer Services industry and the overall market, STONEMOR PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio of 1.04 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, STON has managed to keep a strong quick ratio of 1.72, which demonstrates the ability to cover short-term cash needs.
- You can view the full Stonemor Partners Ratings Report.
- LRE, with its very weak revenue results, has greatly underperformed against the industry average of 2.7%. Since the same quarter one year prior, revenues plummeted by 58.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 47.69% is the gross profit margin for LRR ENERGY LP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, LRE's net profit margin of -42.18% significantly underperformed when compared to the industry average.
- LRR ENERGY 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, LRR ENERGY LP reported poor results of -$1.90 versus $0.00 in the prior year. This year, the market expects an improvement in earnings ($0.46 versus -$1.90).
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, LRR ENERGY 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 135.8% when compared to the same quarter one year ago, falling from $20.52 million to -$7.34 million.
- You can view the full LRR Energy Ratings Report.
- Our dividend calendar.