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."CYS Investments Dividend Yield: 13.30% CYS Investments (NYSE: CYS) shares currently have a dividend yield of 13.30%. CYS Investments, Inc., a specialty finance company, makes leveraged investments in whole-pool residential mortgage pass-through securities where the principal and interest payments are guaranteed. The company has a P/E ratio of 3.60. The average volume for CYS Investments has been 1,737,500 shares per day over the past 30 days. CYS Investments has a market cap of $1.5 billion and is part of the real estate industry. Shares are up 3.8% 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 CYS Investments as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we find that the stock has experienced relatively poor performance when compared with the S&P 500 during the past year. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 221.4% when compared to the same quarter one year prior, rising from -$91.86 million to $111.56 million.
- 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 Real Estate Investment Trusts (REITs) industry and the overall market, CYS INVESTMENTS INC's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for CYS INVESTMENTS INC is currently very high, coming in at 93.99%. Regardless of CYS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CYS's net profit margin of 133.36% significantly outperformed against the industry.
- CYS INVESTMENTS INC 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, CYS INVESTMENTS INC turned its bottom line around by earning $2.51 versus -$2.87 in the prior year. For the next year, the market is expecting a contraction of 52.2% in earnings ($1.20 versus $2.51).
- In its most recent trading session, CYS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- You can view the full CYS Investments Ratings Report.
- The revenue growth greatly exceeded the industry average of 20.1%. Since the same quarter one year prior, revenues rose by 22.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for SHIP FINANCE INTL LTD is rather high; currently it is at 63.24%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 41.58% significantly outperformed against the industry average.
- SHIP FINANCE INTL LTD reported significant earnings per share improvement 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, SHIP FINANCE INTL LTD reported lower earnings of $1.01 versus $2.26 in the prior year. This year, the market expects an improvement in earnings ($1.40 versus $1.01).
- Currently the debt-to-equity ratio of 1.50 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, SFL has a quick ratio of 0.54, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- 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. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SHIP FINANCE INTL LTD's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Ship Finance International Ratings Report.
- ONEOK INC has improved earnings per share by 28.6% 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ONEOK INC increased its bottom line by earning $1.53 versus $1.33 in the prior year. This year, the market expects an improvement in earnings ($1.78 versus $1.53).
- The net income growth from the same quarter one year ago has significantly 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 4.2% when compared to the same quarter one year prior, going from $90.74 million to $94.54 million.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 19.8%. Since the same quarter one year prior, revenues fell by 17.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- OKE has underperformed the S&P 500 Index, declining 21.90% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- The debt-to-equity ratio is very high at 13.95 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.38, which clearly demonstrates the inability to cover short-term cash needs.
- You can view the full ONEOK Ratings Report.
- Our dividend calendar.