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."Helmerich & Payne Dividend Yield: 4.30% Helmerich & Payne (NYSE: HP) shares currently have a dividend yield of 4.30%. Helmerich & Payne, Inc. primarily operates as a contract drilling company in South America, the Middle East, and Africa. The company has a P/E ratio of 9.85. The average volume for Helmerich & Payne has been 2,094,900 shares per day over the past 30 days. Helmerich & Payne has a market cap of $6.9 billion and is part of the energy industry. Shares are down 11.8% 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 Helmerich & Payne as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 16.1%. Since the same quarter one year prior, revenues rose by 13.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- HP's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, HP has a quick ratio of 2.16, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has increased to $320.63 million or 36.12% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 17.74%.
- 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 Energy Equipment & Services industry average. The net income increased by 5.6% when compared to the same quarter one year prior, going from $159.80 million to $168.69 million.
- 45.13% is the gross profit margin for HELMERICH & PAYNE which we consider to be strong. Regardless of HP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HP's net profit margin of 17.12% compares favorably to the industry average.
- You can view the full Helmerich & Payne Ratings Report.
- The revenue growth came in higher than the industry average of 9.5%. Since the same quarter one year prior, revenues slightly increased by 7.4%. 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 gross profit margin for SIX FLAGS ENTERTAINMENT CORP is rather high; currently it is at 66.11%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 19.38% is above that of the industry average.
- Net operating cash flow has increased to $211.94 million or 25.34% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -18.16%.
- 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.
- Although SIX's debt-to-equity ratio of 4.01 is very high, it is currently less than that of the industry average. Even though the debt-to-equity ratio is weak, SIX's quick ratio is somewhat strong at 1.09, demonstrating the ability to handle short-term liquidity needs.
- You can view the full Six Flags Entertainment Ratings Report.
- KKR's very impressive revenue growth greatly exceeded the industry average of 1.4%. Since the same quarter one year prior, revenues leaped by 56.7%. 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.
- Net operating cash flow has increased to -$349.05 million or 35.71% when compared to the same quarter last year. In addition, KKR & CO LP has also vastly surpassed the industry average cash flow growth rate of -187.98%.
- KKR & CO LP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, KKR & CO LP increased its bottom line by earning $2.29 versus $2.23 in the prior year. This year, the market expects an improvement in earnings ($2.36 versus $2.29).
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, KKR & CO LP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The share price of KKR & CO LP has not done very well: it is down 5.32% 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.
- You can view the full KKR Ratings Report.
- Our dividend calendar.