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." Scorpio Tankers Dividend Yield: 5.60% Scorpio Tankers (NYSE: STNG) shares currently have a dividend yield of 5.60%. Scorpio Tankers Inc., together with its subsidiaries, is engaged in the seaborne transportation of refined petroleum products and crude oil worldwide. The company has a P/E ratio of 27.61. The average volume for Scorpio Tankers has been 2,490,200 shares per day over the past 30 days. Scorpio Tankers has a market cap of $1.4 billion and is part of the conglomerates industry. Shares are down 28.3% year-to-date as of the close of trading on Wednesday. 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 Scorpio Tankers as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 6.4%. Since the same quarter one year prior, revenues rose by 43.5%. 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 debt-to-equity ratio is somewhat low, currently at 0.95, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, STNG has a quick ratio of 1.68, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for SCORPIO TANKERS INC is currently lower than what is desirable, coming in at 33.92%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.39% trails the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 273.8% when compared to the same quarter one year ago, falling from $0.67 million to -$1.16 million.
- You can view the full Scorpio Tankers Ratings Report.