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 three stocks with substantial yields, that ultimately, we have rated "Hold."BGC Partners Dividend Yield: 5 BGC Partners (NASDAQ: BGCP) shares currently have a dividend yield of 5. BGC Partners, Inc. operates as a brokerage company in the United Kingdom, the United States, and internationally. It operates in two segments, Financial Services and Real Estate Services. The company has a P/E ratio of 481.5. The average volume for BGC Partners has been 937000 shares per day over the past 30 days. BGC Partners has a market cap of $2.03 billion and is part of the financial services industry. Shares are up 5.2% year-to-date as of the close of trading on Wednesday. EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE. TheStreet Ratings rates BGC Partners as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 4.6%. Since the same quarter one year prior, revenues rose by 16.1%. 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 significantly increased by 60.98% to $102.72 million when compared to the same quarter last year. In addition, BGC PARTNERS INC has also modestly surpassed the industry average cash flow growth rate of 55.98%.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Capital Markets industry. The net income has significantly decreased by 552.0% when compared to the same quarter one year ago, falling from $4.13 million to -$18.69 million.
- 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 Capital Markets industry and the overall market on the basis of return on equity, BGC PARTNERS INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full BGC Partners Ratings Report.
- The current debt-to-equity ratio, 0.43, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.03, which illustrates the ability to avoid short-term cash problems.
- 35.76% is the gross profit margin for CONOCOPHILLIPS which we consider to be strong. Regardless of COP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -0.34% trails the industry average.
- 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CONOCOPHILLIPS's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Net operating cash flow has decreased to $2,597.00 million or 33.59% 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 ConocoPhillips Ratings Report.
- The revenue growth came in higher than the industry average of 9.4%. Since the same quarter one year prior, revenues rose by 37.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Powered by its strong earnings growth of 200.00% and other important driving factors, this stock has surged by 26.19% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- EXCEL TRUST INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, EXCEL TRUST INC continued to lose money by earning -$0.07 versus -$0.08 in the prior year. For the next year, the market is expecting a contraction of 71.4% in earnings (-$0.12 versus -$0.07).
- The gross profit margin for EXCEL TRUST INC is rather low; currently it is at 23.71%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 8.49% significantly trails the industry average.
- Net operating cash flow has decreased to $7.15 million or 24.96% 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 Excel Ratings Report.
- Our dividend calendar.