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."Annaly Capital Management Dividend Yield: 10.60% Annaly Capital Management (NYSE: NLY) shares currently have a dividend yield of 10.60%. Annaly Capital Management, Inc. owns a portfolio of real estate related investments in the United States. The company has a P/E ratio of 14.20. The average volume for Annaly Capital Management has been 7,823,900 shares per day over the past 30 days. Annaly Capital Management has a market cap of $10.8 billion and is part of the real estate industry. Shares are up 14.7% 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 Annaly Capital Management as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we find that the company's return on equity has been disappointing. 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 Real Estate Investment Trusts (REITs) industry. The net income increased by 84.4% when compared to the same quarter one year prior, rising from $192.46 million to $354.86 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.
- NLY, 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 2.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, ANNALY CAPITAL MANAGEMENT's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Annaly Capital Management Ratings Report.
- COLUMBIA PROPERTY TRUST INC 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, COLUMBIA PROPERTY TRUST INC increased its bottom line by earning $0.21 versus $0.05 in the prior year. This year, the market expects an improvement in earnings ($0.38 versus $0.21).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 420.6% when compared to the same quarter one year prior, rising from $4.80 million to $24.99 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. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- The gross profit margin for COLUMBIA PROPERTY TRUST INC is rather low; currently it is at 19.19%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 18.00% trails that of the industry average.
- Net operating cash flow has declined marginally to $58.14 million or 6.28% 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 Columbia Property Ratings Report.
- VNR's very impressive revenue growth greatly exceeded the industry average of 6.4%. Since the same quarter one year prior, revenues leaped by 128.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- VANGUARD NATURAL RESOURCES 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, VANGUARD NATURAL RESOURCES turned its bottom line around by earning $0.75 versus -$2.76 in the prior year. This year, the market expects an improvement in earnings ($1.23 versus $0.75).
- VNR has underperformed the S&P 500 Index, declining 13.84% 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 1.16 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, VNR maintains a poor quick ratio of 0.80, which illustrates the inability to avoid short-term cash problems.
- You can view the full Vanguard Natural Resources Ratings Report.
- Our dividend calendar.