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."Tesoro Logistics Dividend Yield: 4.40% Tesoro Logistics (NYSE: TLLP) shares currently have a dividend yield of 4.40%. Tesoro Logistics LP owns, operates, develops, and acquires logistics assets related to crude oil and refined products in the United States. It operates in two segments, Crude Oil Gathering, and Terminalling and Transportation. The company has a P/E ratio of 31.98. The average volume for Tesoro Logistics has been 825,300 shares per day over the past 30 days. Tesoro Logistics has a market cap of $4.7 billion and is part of the energy industry. Shares are up 0.6% year-to-date as of the close of trading on Friday. 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 Tesoro Logistics as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and compelling growth in net income. 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:
- TLLP's very impressive revenue growth greatly exceeded the industry average of 6.7%. Since the same quarter one year prior, revenues leaped by 55.4%. 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 company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TESORO LOGISTICS LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for TESORO LOGISTICS LP is rather high; currently it is at 63.58%. It has increased significantly from the same period last year. Along with this, the net profit margin of 21.54% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 70.08% to $63.60 million when compared to the same quarter last year. In addition, TESORO LOGISTICS LP has also vastly surpassed the industry average cash flow growth rate of -1.92%.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 5382.4% when compared to the same quarter one year prior, rising from $0.59 million to $32.40 million.
- You can view the full Tesoro Logistics Ratings Report.
- The revenue growth came in higher than the industry average of 13.7%. Since the same quarter one year prior, revenues rose by 34.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 11.3% when compared to the same quarter one year prior, going from $25.65 million to $28.54 million.
- 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. 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.
- The gross profit margin for MEDICAL PROPERTIES TRUST is rather high; currently it is at 66.30%. Regardless of MPW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MPW's net profit margin of 34.83% compares favorably to the industry average.
- You can view the full Medical Properties Ratings Report.
- SUI's revenue growth has slightly outpaced the industry average of 13.7%. Since the same quarter one year prior, revenues rose by 16.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 440.00% and other important driving factors, this stock has surged by 45.75% 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.
- SUN COMMUNITIES INC 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. During the past fiscal year, SUN COMMUNITIES INC increased its bottom line by earning $0.32 versus $0.20 in the prior year. This year, the market expects an improvement in earnings ($0.48 versus $0.32).
- 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 359.5% when compared to the same quarter one year prior, rising from $5.26 million to $24.19 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, SUN COMMUNITIES INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full Sun Communities Ratings Report.
- Our dividend calendar.