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."Piedmont Office Realty Dividend Yield: 4.40% Piedmont Office Realty (NYSE: PDM) shares currently have a dividend yield of 4.40%. Piedmont Office Realty Trust, Inc. engages in the acquisition and ownership of commercial real estate properties in the United States. Its property portfolio primarily consists of office and industrial buildings, warehouses, and manufacturing facilities. The company has a P/E ratio of 65.93. The average volume for Piedmont Office Realty has been 821,100 shares per day over the past 30 days. Piedmont Office Realty has a market cap of $3.0 billion and is part of the real estate industry. Shares are up 15.2% 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 Piedmont Office Realty as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- PDM's revenue growth trails the industry average of 13.8%. Since the same quarter one year prior, revenues slightly increased by 1.7%. 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.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The gross profit margin for PIEDMONT OFFICE REALTY TRUST is rather low; currently it is at 19.15%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.30% significantly trails the industry average.
- Net operating cash flow has decreased to $48.62 million or 39.21% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full Piedmont Office Realty Ratings Report.
- 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. To add to this, SQM has a quick ratio of 2.19, which demonstrates the ability of the company to cover short-term liquidity needs.
- 44.57% is the gross profit margin for SOC QUIMICA Y MINERA DE CHI which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.21% is above that of the industry average.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- 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 Chemicals industry. The net income has significantly decreased by 52.3% when compared to the same quarter one year ago, falling from $138.91 million to $66.30 million.
- 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. In comparison to the other companies in the Chemicals industry and the overall market, SOC QUIMICA Y MINERA DE CHI's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full Sociedad Quimica Y Minera De Chile Ratings Report.
- VGR's very impressive revenue growth greatly exceeded the industry average of 0.3%. Since the same quarter one year prior, revenues leaped by 95.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- VECTOR GROUP LTD 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, VECTOR GROUP LTD increased its bottom line by earning $0.32 versus $0.27 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus $0.32).
- 45.46% is the gross profit margin for VECTOR GROUP LTD which we consider to be strong. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, VGR's net profit margin of 4.88% significantly trails the industry average.
- Powered by its strong earnings growth of 136.74% and other important driving factors, this stock has surged by 42.22% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- Net operating cash flow has declined marginally to $46.05 million or 8.00% when compared to the same quarter last year. Despite a decrease in cash flow of 8.00%, VECTOR GROUP LTD is in line with the industry average cash flow growth rate of -15.49%.
- You can view the full Vector Group Ratings Report.
- Our dividend calendar.