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." Capital Product Partners Dividend Yield: 10.60% Capital Product Partners (NASDAQ: CPLP) shares currently have a dividend yield of 10.60%. Capital Product Partners L.P., a shipping company, provides marine transportation services in Greece. The company has a P/E ratio of 43.90. The average volume for Capital Product Partners has been 777,300 shares per day over the past 30 days. Capital Product Partners has a market cap of $781.3 million and is part of the transportation industry. Shares are down 13.9% 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 Capital Product Partners as a buy. 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, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 6.7%. Since the same quarter one year prior, revenues rose by 12.7%. 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.
- The debt-to-equity ratio is somewhat low, currently at 0.65, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 3.65, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for CAPITAL PRODUCT PARTNERS LP is rather high; currently it is at 65.74%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.39% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 108.04% to $36.92 million when compared to the same quarter last year. In addition, CAPITAL PRODUCT PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -2.53%.
- CAPITAL PRODUCT PARTNERS 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. 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, CAPITAL PRODUCT PARTNERS LP turned its bottom line around by earning $0.99 versus -$0.45 in the prior year. For the next year, the market is expecting a contraction of 69.7% in earnings ($0.30 versus $0.99).
- You can view the full Capital Product Partners Ratings Report.