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."Golar LNG Dividend Yield: 5.90% Golar LNG (NASDAQ: GLNG) shares currently have a dividend yield of 5.90%. Golar LNG Limited, a midstream liquefied natural gas (LNG) company, is engaged in the transportation, regasification and liquefaction, and trading of LNG. The company operates in two segments, Vessel Operations and Commodity Trading. The company has a P/E ratio of 19.09. The average volume for Golar LNG has been 2,619,200 shares per day over the past 30 days. Golar LNG has a market cap of $2.8 billion and is part of the transportation industry. Shares are down 16.3% year-to-date as of the close of trading on Tuesday. 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 Golar LNG as a hold. 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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- GLNG's very impressive revenue growth greatly exceeded the industry average of 6.7%. Since the same quarter one year prior, revenues leaped by 84.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels.
- Compared to its price level of one year ago, GLNG is down 11.93% to its most recent closing price of 30.35. Looking ahead, our view is that this company's fundamentals will not have much impact either way, allowing the stock to generally move up or down based on the push and pull of the broad market.
- 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, GOLAR LNG LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $18.98 million or 16.90% 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 Golar LNG Ratings Report.
- The revenue growth greatly exceeded the industry average of 6.7%. Since the same quarter one year prior, revenues rose by 44.4%. 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 67.0% when compared to the same quarter one year prior, rising from -$27.52 million to -$9.09 million.
- The debt-to-equity ratio is very high at 9.52 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, ATLS maintains a poor quick ratio of 0.74, which illustrates the inability to avoid short-term cash problems.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ATLAS ENERGY LP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Atlas Energy Ratings Report.
- RGC, with its decline in revenue, underperformed when compared the industry average of 8.4%. Since the same quarter one year prior, revenues fell by 14.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- REGAL ENTERTAINMENT GROUP 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, REGAL ENTERTAINMENT GROUP increased its bottom line by earning $1.00 versus $0.93 in the prior year. For the next year, the market is expecting a contraction of 6.5% in earnings ($0.94 versus $1.00).
- The gross profit margin for REGAL ENTERTAINMENT GROUP is rather low; currently it is at 18.84%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.84% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$27.90 million or 2690.00% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full Regal Entertainment Group Ratings Report.
- Our dividend calendar.