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." People's United Financial Dividend Yield: 4.50% People's United Financial (NASDAQ: PBCT) shares currently have a dividend yield of 4.50%. People's United Financial, Inc. operates as the bank holding company for People's United Bank that provides commercial banking, retail and business banking, and wealth management services to individual, corporate, and municipal customers. The company has a P/E ratio of 18.27. The average volume for People's United Financial has been 3,033,500 shares per day over the past 30 days. People's United Financial has a market cap of $4.6 billion and is part of the banking industry. Shares are down 2.2% 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 People's United Financial as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 25.1%. Since the same quarter one year prior, revenues slightly increased by 2.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- PEOPLE'S UNITED FINL INC has improved earnings per share by 10.5% 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. During the past fiscal year, PEOPLE'S UNITED FINL INC increased its bottom line by earning $0.74 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($0.84 versus $0.74).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Thrifts & Mortgage Finance industry average. The net income increased by 5.3% when compared to the same quarter one year prior, going from $58.50 million to $61.60 million.
- The gross profit margin for PEOPLE'S UNITED FINL INC is currently very high, coming in at 87.52%. Regardless of PBCT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PBCT's net profit margin of 17.96% compares favorably to the industry average.
- You can view the full People's United Financial Ratings Report.
- Despite its growing revenue, the company underperformed as compared with the industry average of 7.9%. Since the same quarter one year prior, revenues slightly increased by 6.4%. 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 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. Compared to other companies in the Electric Utilities industry and the overall market on the basis of return on equity, SOUTHERN CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Net operating cash flow has slightly increased to $2,617.00 million or 6.20% when compared to the same quarter last year. Despite an increase in cash flow, SOUTHERN CO's cash flow growth rate is still lower than the industry average growth rate of 17.72%.
- 41.39% is the gross profit margin for SOUTHERN CO which we consider to be strong. Regardless of SO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 13.76% trails the industry average.
- SOUTHERN CO's earnings per share declined by 17.5% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, SOUTHERN CO reported lower earnings of $1.87 versus $2.67 in the prior year. This year, the market expects an improvement in earnings ($2.80 versus $1.87).
- You can view the full Southern Ratings Report.
- 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 57.6% when compared to the same quarter one year prior, rising from $18.47 million to $29.11 million.
- Net operating cash flow has significantly increased by 659.45% to $102.92 million when compared to the same quarter last year. In addition, GENESIS ENERGY -LP has also vastly surpassed the industry average cash flow growth rate of -2.19%.
- GENESIS 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, GENESIS ENERGY -LP reported lower earnings of $1.00 versus $1.23 in the prior year. This year, the market expects an improvement in earnings ($1.29 versus $1.00).
- GEL, with its decline in revenue, slightly underperformed the industry average of 6.4%. Since the same quarter one year prior, revenues fell by 11.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full Genesis Energy Ratings Report.
- Our dividend calendar.