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."China Green Agriculture Dividend Yield: 19.40% China Green Agriculture (NYSE: CGA) shares currently have a dividend yield of 19.40%. China Green Agriculture, Inc., through its subsidiaries, engages in the research, development, production, distribution, and sale of various types of fertilizers and agricultural products primarily in the People's Republic of China. The company has a P/E ratio of 2.54. The average volume for China Green Agriculture has been 775,600 shares per day over the past 30 days. China Green Agriculture has a market cap of $66.9 million and is part of the chemicals industry. Shares are down 43.1% 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 China Green Agriculture as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.2%. Since the same quarter one year prior, revenues slightly increased by 3.4%. 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.
- CGA's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CGA has a quick ratio of 1.96, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has slightly increased to $15.33 million or 3.41% when compared to the same quarter last year. Despite an increase in cash flow, CHINA GREEN AGRICULTURE INC's average is still marginally south of the industry average growth rate of 4.16%.
- 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 Chemicals industry. The net income has significantly decreased by 70.2% when compared to the same quarter one year ago, falling from $14.26 million to $4.25 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Chemicals industry and the overall market, CHINA GREEN AGRICULTURE INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full China Green Agriculture Ratings Report.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 47.4% when compared to the same quarter one year prior, rising from $13.70 million to $20.20 million.
- SXCP, with its decline in revenue, slightly underperformed the industry average of 0.2%. Since the same quarter one year prior, revenues slightly dropped by 2.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- In its most recent trading session, SXCP has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- 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. When compared to other companies in the Metals & Mining industry and the overall market, SUNCOKE ENERGY PARTNERS LP's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- You can view the full SunCoke Energy Partners Ratings Report.
- Net operating cash flow has significantly increased by 61.43% to $24.70 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 17.58%.
- NCMI, with its decline in revenue, underperformed when compared the industry average of 8.3%. Since the same quarter one year prior, revenues fell by 18.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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 Media industry. The net income has significantly decreased by 62.1% when compared to the same quarter one year ago, falling from $9.50 million to $3.60 million.
- The share price of NATIONAL CINEMEDIA INC has not done very well: it is down 15.23% 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, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full National CineMedia Ratings Report.
- Our dividend calendar.