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." Teekay LNG Partners Dividend Yield: 7.10% Teekay LNG Partners (NYSE: TGP) shares currently have a dividend yield of 7.10%. Teekay LNG Partners L.P. provides marine transportation services for liquefied natural gas (LNG), liquefied petroleum gas (LPG), and crude oil worldwide. The company has a P/E ratio of 15.73. The average volume for Teekay LNG Partners has been 205,000 shares per day over the past 30 days. Teekay LNG Partners has a market cap of $2.9 billion and is part of the transportation industry. Shares are down 9.7% year-to-date as of the close of trading on Thursday. 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 Teekay LNG Partners as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- TGP's revenue growth has slightly outpaced the industry average of 6.5%. Since the same quarter one year prior, revenues slightly increased by 0.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- TEEKAY LNG 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, TEEKAY LNG PARTNERS LP increased its bottom line by earning $2.49 versus $1.54 in the prior year. This year, the market expects an improvement in earnings ($2.51 versus $2.49).
- Net operating cash flow has declined marginally to $40.63 million or 3.22% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, TEEKAY LNG PARTNERS LP has marginally lower results.
- The debt-to-equity ratio of 1.50 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.34, which clearly demonstrates the inability to cover short-term cash needs.
- You can view the full Teekay LNG Partners Ratings Report.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry average. The net income increased by 8.6% when compared to the same quarter one year prior, going from $6.00 million to $6.52 million.
- The gross profit margin for TRANSMONTAIGNE PARTNERS LP is rather high; currently it is at 52.70%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.26% significantly outperformed against the industry average.
- The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.97 is somewhat weak and could be cause for future problems.
- TLP has underperformed the S&P 500 Index, declining 15.11% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- TRANSMONTAIGNE PARTNERS LP's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, TRANSMONTAIGNE PARTNERS LP reported lower earnings of $1.90 versus $2.31 in the prior year. For the next year, the market is expecting a contraction of 3.9% in earnings ($1.83 versus $1.90).
- You can view the full TransMontaigne Partners Ratings Report.
- The revenue growth came in higher than the industry average of 6.5%. Since the same quarter one year prior, revenues slightly increased by 5.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- MARPS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
- MARINE PETROLEUM TRUST reported flat earnings per share in the most recent quarter. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, MARINE PETROLEUM TRUST increased its bottom line by earning $1.41 versus $1.36 in the prior year.
- MARPS has underperformed the S&P 500 Index, declining 10.10% 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 company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry average. The net income has decreased by 1.9% when compared to the same quarter one year ago, dropping from $0.73 million to $0.71 million.
- You can view the full Marine Petroleum Ratings Report.
- Our dividend calendar.