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."Dorchester Minerals Dividend Yield: 7.50% Dorchester Minerals (NASDAQ: DMLP) shares currently have a dividend yield of 7.50%. Dorchester Minerals, L.P. is engaged in the acquisition, ownership, and administration of producing and nonproducing crude oil and natural gas royalty, net profits, and leasehold interests in the United States. The company has a P/E ratio of 15.22. The average volume for Dorchester Minerals has been 66,700 shares per day over the past 30 days. Dorchester Minerals has a market cap of $728.5 million and is part of the financial services industry. Shares are down 7% 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 Dorchester Minerals as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow. Highlights from the ratings report include:
- DMLP 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. Along with this, the company maintains a quick ratio of 21.03, which clearly demonstrates the ability to cover short-term cash needs.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, DORCHESTER MINERALS -LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for DORCHESTER MINERALS -LP is currently very high, coming in at 91.44%. Regardless of DMLP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DMLP's net profit margin of 69.79% significantly outperformed against the industry.
- DORCHESTER MINERALS -LP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, DORCHESTER MINERALS -LP increased its bottom line by earning $1.37 versus $1.20 in the prior year.
- The net income growth from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income increased by 2.0% when compared to the same quarter one year prior, going from $10.75 million to $10.97 million.
- You can view the full Dorchester Minerals Ratings Report.
- The revenue growth came in higher than the industry average of 1.4%. Since the same quarter one year prior, revenues rose by 22.6%. 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 gross profit margin for MAIN STREET CAPITAL CORP is currently very high, coming in at 84.84%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 59.33% significantly outperformed against the industry average.
- Net operating cash flow has decreased to -$20.32 million or 14.54% when compared to the same quarter last year. Despite a decrease in cash flow of 14.54%, MAIN STREET CAPITAL CORP is still significantly exceeding the industry average of -187.98%.
- The share price of MAIN STREET CAPITAL CORP has not done very well: it is down 9.06% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- MAIN STREET CAPITAL CORP's earnings per share declined by 36.8% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, MAIN STREET CAPITAL CORP reported lower earnings of $2.66 versus $3.54 in the prior year. For the next year, the market is expecting a contraction of 18.4% in earnings ($2.17 versus $2.66).
- You can view the full Main Street Capital Corporation Ratings Report.
- The revenue growth greatly exceeded the industry average of 1.4%. Since the same quarter one year prior, revenues rose by 44.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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.
- ALLIANCEBERNSTEIN HOLDING LP has improved earnings per share by 40.6% 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, ALLIANCEBERNSTEIN HOLDING LP increased its bottom line by earning $1.72 versus $0.50 in the prior year. This year, the market expects an improvement in earnings ($1.80 versus $1.72).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Capital Markets industry average. The net income increased by 49.5% when compared to the same quarter one year prior, rising from $29.52 million to $44.13 million.
- Net operating cash flow has slightly increased to $43.16 million or 6.63% when compared to the same quarter last year. In addition, ALLIANCEBERNSTEIN HOLDING LP has also vastly surpassed the industry average cash flow growth rate of -187.98%.
- You can view the full AllianceBernstein Holding L.P Ratings Report.
- Our dividend calendar.