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: 8.60% America First Multifamily Investors (NASDAQ: ATAX) shares currently have a dividend yield of 8.60%. 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 22.35. The average volume for America First Multifamily Investors has been 126,700 shares per day over the past 30 days. America First Multifamily Investors has a market cap of $350.1 million and is part of the real estate industry. Shares are down 7.6% 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 America First Multifamily Investors as a hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and deteriorating net income. Highlights from the ratings report include:
- Net operating cash flow has significantly increased by 60.36% to $4.59 million when compared to the same quarter last year. In addition, AMERICA FIRST MULTIFAMILY-LP has also vastly surpassed the industry average cash flow growth rate of -34.57%.
- 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.
- 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 Thrifts & Mortgage Finance industry and the overall market, AMERICA FIRST MULTIFAMILY-LP's return on equity is below that of both the industry average and the S&P 500.
- The share price of AMERICA FIRST MULTIFAMILY-LP has not done very well: it is down 17.00% 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.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 131515.4% when compared to the same quarter one year prior, rising from -$0.01 million to $17.08 million.
- The gross profit margin for SOLAR CAPITAL LTD is currently very high, coming in at 70.54%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 61.00% significantly outperformed against the industry average.
- SLRC, with its decline in revenue, underperformed when compared the industry average of 1.0%. Since the same quarter one year prior, revenues fell by 28.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- SOLAR CAPITAL LTD has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SOLAR CAPITAL LTD reported lower earnings of $1.70 versus $3.12 in the prior year. For the next year, the market is expecting a contraction of 8.8% in earnings ($1.55 versus $1.70).
- 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 Capital Markets industry and the overall market, SOLAR CAPITAL LTD's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Solar Capital Ratings Report.
- QRE's revenue growth has slightly outpaced the industry average of 6.7%. Since the same quarter one year prior, revenues slightly increased by 3.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- QR ENERGY LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, QR ENERGY LP turned its bottom line around by earning $0.13 versus -$0.46 in the prior year. This year, the market expects an improvement in earnings ($1.20 versus $0.13).
- The gross profit margin for QR ENERGY LP is rather high; currently it is at 57.07%. Regardless of QRE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, QRE's net profit margin of 78.42% significantly outperformed against the industry.
- QRE has underperformed the S&P 500 Index, declining 5.07% from its price level of one year ago. 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 debt-to-equity ratio is very high at 2.51 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, QRE has a quick ratio of 0.67, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full QR Energy Ratings Report.
- Our dividend calendar.