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."Alliance Resource Partners Dividend Yield: 6.30% Alliance Resource Partners (NASDAQ: ARLP) shares currently have a dividend yield of 6.30%. Alliance Resource Partners, L.P. is engaged in the production and marketing of coal primarily to utilities and industrial users in the United States. It operates 10 underground mining complexes in Illinois, Indiana, Kentucky, Maryland, and West Virginia. The company has a P/E ratio of 8.93. The average volume for Alliance Resource Partners has been 241,000 shares per day over the past 30 days. Alliance Resource Partners has a market cap of $3.0 billion and is part of the metals & mining industry. Shares are down 8.2% 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 Alliance Resource Partners as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, attractive valuation levels and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 6.7%. Since the same quarter one year prior, revenues slightly increased by 6.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- ALLIANCE RESOURCE PTNRS -LP 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 year. We feel that this trend should continue. During the past fiscal year, ALLIANCE RESOURCE PTNRS -LP increased its bottom line by earning $3.22 versus $3.07 in the prior year. This year, the market expects an improvement in earnings ($4.76 versus $3.22).
- 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 37.6% when compared to the same quarter one year prior, rising from $87.19 million to $119.98 million.
- 37.62% is the gross profit margin for ALLIANCE RESOURCE PTNRS -LP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.07% significantly outperformed against the industry average.
- You can view the full Alliance Resource Partners Ratings Report.
- The revenue growth came in higher than the industry average of 28.3%. Since the same quarter one year prior, revenues rose by 47.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 6835.00% and other important driving factors, this stock has surged by 32.81% 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.
- 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 Transportation Infrastructure industry and the overall market, MACQUARIE INFRASTRUCT CO LLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- 47.17% is the gross profit margin for MACQUARIE INFRASTRUCT CO LLC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 254.99% significantly outperformed against the industry average.
- You can view the full Macquarie Infrastructure Ratings Report.
- TE's revenue growth has slightly outpaced the industry average of 1.4%. Since the same quarter one year prior, revenues slightly increased by 7.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 30.13% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TE 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 $245.20 million or 12.32% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -3.75%.
- TECO ENERGY INC has improved earnings per share by 6.7% in the most recent quarter compared to 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, TECO ENERGY INC reported lower earnings of $0.91 versus $1.13 in the prior year. This year, the market expects an improvement in earnings ($1.04 versus $0.91).
- Even though the current debt-to-equity ratio is 1.42, it is still below the industry average, suggesting that this level of debt is acceptable within the Multi-Utilities industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.30 is very low and demonstrates very weak liquidity.
- You can view the full TECO Energy Ratings Report.
- Our dividend calendar.