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."Apollo Commercial Real Estate Finance Dividend Yield: 10.30% Apollo Commercial Real Estate Finance (NYSE: ARI) shares currently have a dividend yield of 10.30%. Apollo Commercial Real Estate Finance, Inc. The company has a P/E ratio of 9.66. The average volume for Apollo Commercial Real Estate Finance has been 713,700 shares per day over the past 30 days. Apollo Commercial Real Estate Finance has a market cap of $801.5 million and is part of the real estate industry. Shares are up 4.9% year-to-date as of the close of trading on Friday. 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 Apollo Commercial Real Estate Finance as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, 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:
- ARI's very impressive revenue growth greatly exceeded the industry average of 9.8%. Since the same quarter one year prior, revenues leaped by 89.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- APOLLO COMMERCIAL RE FIN INC has improved earnings per share by 11.9% 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. We feel that this trend should continue. During the past fiscal year, APOLLO COMMERCIAL RE FIN INC increased its bottom line by earning $1.73 versus $1.26 in the prior year. This year, the market expects an improvement in earnings ($1.84 versus $1.73).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 45.1% when compared to the same quarter one year prior, rising from $17.58 million to $25.51 million.
- The gross profit margin for APOLLO COMMERCIAL RE FIN INC is currently very high, coming in at 85.78%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 63.70% significantly outperformed against the industry average.
- You can view the full Apollo Commercial Real Estate Finance Ratings Report.
- LVS, with its decline in revenue, underperformed when compared the industry average of 7.0%. Since the same quarter one year prior, revenues fell by 24.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- LAS VEGAS SANDS CORP's earnings per share declined by 32.6% 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, LAS VEGAS SANDS CORP increased its bottom line by earning $3.51 versus $2.79 in the prior year. For the next year, the market is expecting a contraction of 22.8% in earnings ($2.71 versus $3.51).
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 33.18%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 32.63% compared to the year-earlier quarter. Looking ahead, the stock's sharp decline over the past year may have been what was needed in order to bring its value into alignment with its fundamentals and others in its industry.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry average. The net income has significantly decreased by 34.0% when compared to the same quarter one year ago, falling from $776.19 million to $511.92 million.
- You can view the full Las Vegas Sands Ratings Report.
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Capital Markets industry average. The net income increased by 28.8% when compared to the same quarter one year prior, rising from $210.04 million to $270.51 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 4.4%. Since the same quarter one year prior, revenues slightly increased by 2.1%. 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.
- The gross profit margin for KKR & CO LP is currently very high, coming in at 80.08%. Regardless of KKR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, KKR's net profit margin of 10.45% is significantly lower than the industry average.
- KKR & CO LP's earnings per share declined by 12.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, KKR & CO LP reported lower earnings of $1.28 versus $2.29 in the prior year. This year, the market expects an improvement in earnings ($2.61 versus $1.28).
- In its most recent trading session, KKR 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 stock's decline during the last year, it is still somewhat more expensive (in proportion to its earnings over the last year) than most other stocks in its industry. We feel, however, that other strengths this company displays offset this slight negative.
- You can view the full KKR Ratings Report.
- Our dividend calendar.