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."American Midstream Partners Dividend Yield: 7.30% American Midstream Partners (NYSE: AMID) shares currently have a dividend yield of 7.30%. American Midstream Partners, LP is engaged in gathering, treating, processing, and transporting natural gas primarily in the Gulf Coast and Southeast regions of the United States. The average volume for American Midstream Partners has been 38,900 shares per day over the past 30 days. American Midstream Partners has a market cap of $406.2 million and is part of the energy industry. Shares are down 6.9% 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 American Midstream Partners as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins. Highlights from the ratings report include:
- AMID's revenue growth has slightly outpaced the industry average of 6.4%. Since the same quarter one year prior, revenues slightly increased by 0.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 92.5% when compared to the same quarter one year prior, rising from -$22.11 million to -$1.67 million.
- 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. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The gross profit margin for AMERICAN MIDSTREAM PRTNRS LP is currently extremely low, coming in at 8.68%. Regardless of AMID's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -2.14% trails the industry average.
- Net operating cash flow has decreased to $8.86 million or 16.09% 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 American Midstream Partners Ratings Report.
- RAS, with its decline in revenue, underperformed when compared the industry average of 13.8%. Since the same quarter one year prior, revenues slightly dropped by 8.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- RAIT FINANCIAL TRUST's earnings per share declined by 16.7% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, RAIT FINANCIAL TRUST reported poor results of -$4.58 versus -$3.92 in the prior year. This year, the market expects an improvement in earnings (-$0.69 versus -$4.58).
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, RAS has underperformed the S&P 500 Index, declining 6.11% 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 company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, RAIT FINANCIAL TRUST's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for RAIT FINANCIAL TRUST is currently extremely low, coming in at 8.87%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -25.80% is significantly below that of the industry average.
- You can view the full Rait Financial Ratings Report.
- The revenue growth came in higher than the industry average of 6.4%. Since the same quarter one year prior, revenues slightly increased by 3.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 446.1% when compared to the same quarter one year prior, rising from -$12.31 million to $42.62 million.
- EV ENERGY PARTNERS 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, EV ENERGY PARTNERS LP reported poor results of -$1.69 versus -$0.35 in the prior year. This year, the market expects an improvement in earnings ($0.45 versus -$1.69).
- EVEP has underperformed the S&P 500 Index, declining 15.39% 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 of 1.15 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, EVEP maintains a poor quick ratio of 0.98, which illustrates the inability to avoid short-term cash problems.
- You can view the full EV Energy Partners Ratings Report.
- Our dividend calendar.