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."Plains All American Pipeline Dividend Yield: 5.40% Plains All American Pipeline (NYSE: PAA) shares currently have a dividend yield of 5.40%. Plains All American Pipeline, L.P., together with its subsidiaries, is engaged in transporting, storing, terminalling, and marketing crude oil, natural gas liquids (NGL), natural gas, and refined products in the United States and Canada. The company has a P/E ratio of 22.13. The average volume for Plains All American Pipeline has been 1,730,400 shares per day over the past 30 days. Plains All American Pipeline has a market cap of $18.8 billion and is part of the energy industry. Shares are up 0.9% 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 Plains All American Pipeline as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, increase in net income and growth in earnings per share. 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:
- The revenue growth came in higher than the industry average of 6.5%. Since the same quarter one year prior, revenues slightly increased by 4.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 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 39.8% when compared to the same quarter one year prior, rising from $231.00 million to $323.00 million.
- Net operating cash flow has increased to $315.00 million or 22.56% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -1.81%.
- PLAINS ALL AMER PIPELNE -LP has improved earnings per share by 36.8% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, PLAINS ALL AMER PIPELNE -LP increased its bottom line by earning $2.80 versus $2.40 in the prior year. For the next year, the market is expecting a contraction of 18.2% in earnings ($2.29 versus $2.80).
- You can view the full Plains All American Pipeline Ratings Report.
- The revenue growth came in higher than the industry average of 13.4%. Since the same quarter one year prior, revenues rose by 43.2%. 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 its closing price of one year ago, NHI's share price has jumped by 26.02%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NHI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- Net operating cash flow has increased to $31.60 million or 19.28% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 6.45%.
- NATIONAL HEALTH INVESTORS' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, NATIONAL HEALTH INVESTORS increased its bottom line by earning $2.76 versus $2.61 in the prior year. This year, the market expects an improvement in earnings ($3.07 versus $2.76).
- The gross profit margin for NATIONAL HEALTH INVESTORS is currently very high, coming in at 73.21%. Regardless of NHI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NHI's net profit margin of 56.84% significantly outperformed against the industry.
- You can view the full National Health Investors 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 5.5%. 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.
- 48.30% is the gross profit margin for SPECTRA ENERGY CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 16.65% is above that of the industry average.
- Net operating cash flow has significantly increased by 68.50% to $337.00 million when compared to the same quarter last year. In addition, SPECTRA ENERGY CORP has also vastly surpassed the industry average cash flow growth rate of -1.81%.
- 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SPECTRA ENERGY CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- SPECTRA ENERGY CORP's earnings per share declined by 23.1% in the most recent quarter compared to the same quarter a year ago. 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, SPECTRA ENERGY CORP increased its bottom line by earning $1.55 versus $1.43 in the prior year. For the next year, the market is expecting a contraction of 2.3% in earnings ($1.52 versus $1.55).
- You can view the full Spectra Energy Ratings Report.
- Our dividend calendar.