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." CenturyLink Dividend Yield: 5.30% CenturyLink (NYSE: CTL) shares currently have a dividend yield of 5.30%. CenturyLink, Inc. operates as an integrated telecommunications company in the United States. The company operates through four segments: Consumer, Business, Wholesale, and Data Hosting. The company has a P/E ratio of 28.93. The average volume for CenturyLink has been 3,263,900 shares per day over the past 30 days. CenturyLink has a market cap of $23.3 billion and is part of the telecommunications industry. Shares are up 28.6% year-to-date as of the close of trading on Monday. 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 CenturyLink as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, solid stock price performance, impressive record of earnings per share growth, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated. 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 Diversified Telecommunication Services industry. The net income increased by 118.0% when compared to the same quarter one year prior, rising from -$1,045.00 million to $188.00 million.
- Powered by its strong earnings growth of 118.75% and other important driving factors, this stock has surged by 29.98% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- CENTURYLINK INC 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, CENTURYLINK INC swung to a loss, reporting -$0.43 versus $1.24 in the prior year. This year, the market expects an improvement in earnings ($2.64 versus -$0.43).
- The gross profit margin for CENTURYLINK INC is rather high; currently it is at 56.29%. Regardless of CTL'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 4.16% trails the industry average.
- CTL, with its decline in revenue, slightly underperformed the industry average of 1.8%. Since the same quarter one year prior, revenues slightly dropped by 0.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full CenturyLink Ratings Report.
- Powered by its strong earnings growth of 281.25% and other important driving factors, this stock has surged by 38.89% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- 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 854.2% when compared to the same quarter one year prior, rising from -$3.42 million to $25.77 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 13.8%. Since the same quarter one year prior, revenues slightly increased by 9.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 39.28% is the gross profit margin for DUPONT FABROS TECHNOLOGY INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 24.40% trails the industry average.
- You can view the full Dupont Fabros Technology Ratings Report.
- The gross profit margin for EL PASO PIPELINE PARTNERS LP is currently very high, coming in at 76.99%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 36.93% significantly outperformed against the industry average.
- Net operating cash flow has slightly increased to $254.00 million or 9.01% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.19%.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 6.4%. Since the same quarter one year prior, revenues slightly dropped by 4.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- In its most recent trading session, EPB 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. 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.
- 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 on the basis of return on equity, EL PASO PIPELINE PARTNERS LP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full El Paso Pipeline Partners Ratings Report.
- Our dividend calendar.