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." BCE Dividend Yield: 4.70% BCE (NYSE: BCE) shares currently have a dividend yield of 4.70%. BCE Inc., a communications company, provides broadband communication services to residential and business customers in Canada. The company operates through four segments: Bell Wireline, Bell Wireless, Bell Media, and Bell Aliant. The company has a P/E ratio of 17.42. The average volume for BCE has been 847,500 shares per day over the past 30 days. BCE has a market cap of $38.2 billion and is part of the telecommunications industry. Shares are up 7.1% 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 BCE as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity. Highlights from the ratings report include:
- BCE's revenue growth has slightly outpaced the industry average of 1.0%. Since the same quarter one year prior, revenues slightly increased by 4.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Diversified Telecommunication Services industry average. The net income increased by 5.8% when compared to the same quarter one year prior, going from $604.00 million to $639.00 million.
- 49.43% is the gross profit margin for BCE INC which we consider to be strong. Regardless of BCE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BCE's net profit margin of 12.24% compares favorably to the industry average.
- BCE INC has improved earnings per share by 5.4% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, BCE INC reported lower earnings of $2.54 versus $3.17 in the prior year.
- In its most recent trading session, BCE 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 stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full BCE Ratings Report.
- AINV's revenue growth has slightly outpaced the industry average of 1.0%. Since the same quarter one year prior, revenues slightly increased by 4.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Capital Markets industry and the overall market, APOLLO INVESTMENT CORP's return on equity exceeds that of both the industry average and the S&P 500.
- 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 243.7% when compared to the same quarter one year prior, rising from $18.80 million to $64.64 million.
- The gross profit margin for APOLLO INVESTMENT CORP is currently very high, coming in at 70.05%. Regardless of AINV's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AINV's net profit margin of 64.26% significantly outperformed against the industry.
- APOLLO INVESTMENT CORP 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, APOLLO INVESTMENT CORP increased its bottom line by earning $1.17 versus $0.49 in the prior year. For the next year, the market is expecting a contraction of 21.8% in earnings ($0.92 versus $1.17).
- You can view the full Apollo Investment Ratings Report.
- Despite its growing revenue, the company underperformed as compared with the industry average of 13.7%. Since the same quarter one year prior, revenues rose by 12.3%. 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.
- Net operating cash flow has increased to $53.85 million or 17.97% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -7.00%.
- The gross profit margin for EPR PROPERTIES is rather high; currently it is at 69.00%. Regardless of EPR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EPR's net profit margin of 43.11% significantly outperformed against the industry.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, EPR PROPERTIES's return on equity is below that of both the industry average and the S&P 500.
- You can view the full EPR Properties Ratings Report.
- Our dividend calendar.