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." WhiteHorse Finance Dividend Yield: 11.00% WhiteHorse Finance (NASDAQ: WHF) shares currently have a dividend yield of 11.00%. Whitehorse Finance, LLC is a business development company. The company has a P/E ratio of 8.15. The average volume for WhiteHorse Finance has been 28,800 shares per day over the past 30 days. WhiteHorse Finance has a market cap of $193.0 million and is part of the financial services industry. Shares are down 14.8% 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 WhiteHorse Finance as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- 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 58.4% when compared to the same quarter one year prior, rising from $3.17 million to $5.02 million.
- Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, WHITEHORSE FINANCE INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The gross profit margin for WHITEHORSE FINANCE INC is rather high; currently it is at 59.65%. Regardless of WHF's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WHF's net profit margin of 55.63% significantly outperformed against the industry.
- WHF has underperformed the S&P 500 Index, declining 16.64% 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.
- Net operating cash flow has significantly decreased to -$55.69 million or 465.05% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full WhiteHorse Finance Ratings Report.
- LRE's very impressive revenue growth greatly exceeded the industry average of 6.7%. Since the same quarter one year prior, revenues leaped by 92.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for LRR ENERGY LP is currently very high, coming in at 83.04%. It has increased significantly from the same period last year. Along with this, the net profit margin of 54.21% significantly outperformed against the industry average.
- LRR ENERGY LP 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, 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 ($1.10 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.
- Net operating cash flow has decreased to $16.63 million or 19.24% 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 LRR Energy Ratings Report.
- Despite its growing revenue, the company underperformed as compared with the industry average of 0.8%. 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.
- MESABI TRUST' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, MESABI TRUST reported lower earnings of $1.61 versus $2.35 in the prior year.
- 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.
- You can view the full Mesabi Ratings Report.
- Our dividend calendar.