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." Exterran Partners Dividend Yield: 7.90% Exterran Partners (NASDAQ: EXLP) shares currently have a dividend yield of 7.90%. Exterran Partners, L.P., together with its subsidiaries, provides natural gas contract operations services to customers in the United States. The company has a P/E ratio of 35.12. The average volume for Exterran Partners has been 129,600 shares per day over the past 30 days. Exterran Partners has a market cap of $1.6 billion and is part of the energy industry. Shares are down 8.8% year-to-date as of the close of trading on Tuesday. 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 Exterran Partners as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, expanding profit margins, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 15.4%. Since the same quarter one year prior, revenues rose by 32.3%. 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 significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 80.4% when compared to the same quarter one year prior, rising from $10.04 million to $18.10 million.
- 46.08% is the gross profit margin for EXTERRAN PARTNERS LP 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 11.81% trails the industry average.
- Net operating cash flow has slightly increased to $52.98 million or 7.96% when compared to the same quarter last year. Despite an increase in cash flow, EXTERRAN PARTNERS LP's average is still marginally south of the industry average growth rate of 16.75%.
- EXTERRAN PARTNERS LP 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, EXTERRAN PARTNERS LP increased its bottom line by earning $1.18 versus $0.14 in the prior year. For the next year, the market is expecting a contraction of 11.9% in earnings ($1.04 versus $1.18).
- You can view the full Exterran Partners Ratings Report.