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."Liberty Property Dividend Yield: 5.50% Liberty Property (NYSE: LPT) shares currently have a dividend yield of 5.50%. Liberty Property Trust is a publicly owned real estate investment holding trust. Through its subsidiary, it provides leasing, property management, development, acquisition, and other tenant-related services for a portfolio of industrial and office properties. The company has a P/E ratio of 28.85. The average volume for Liberty Property has been 871,300 shares per day over the past 30 days. Liberty Property has a market cap of $5.1 billion and is part of the real estate industry. Shares are down 8.8% 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 Liberty Property as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, impressive record of earnings per share growth and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.5%. Since the same quarter one year prior, revenues slightly increased by 7.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- LIBERTY PROPERTY TRUST has improved earnings per share by 23.5% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, LIBERTY PROPERTY TRUST increased its bottom line by earning $1.15 versus $0.70 in the prior year. For the next year, the market is expecting a contraction of 12.2% in earnings ($1.01 versus $1.15).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, LIBERTY PROPERTY TRUST's return on equity is below that of both the industry average and the S&P 500.
- LPT has underperformed the S&P 500 Index, declining 9.42% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- You can view the full Liberty Property Ratings Report.
- Net operating cash flow has significantly increased by 309.78% to $193.00 million when compared to the same quarter last year. In addition, FIRSTENERGY CORP has also vastly surpassed the industry average cash flow growth rate of -25.99%.
- FIRSTENERGY CORP 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, FIRSTENERGY CORP reported lower earnings of $0.50 versus $0.90 in the prior year. This year, the market expects an improvement in earnings ($2.60 versus $0.50).
- FE, with its decline in revenue, slightly underperformed the industry average of 2.8%. Since the same quarter one year prior, revenues slightly dropped by 6.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Electric Utilities industry average, but is greater than that of the S&P 500. The net income increased by 6.7% when compared to the same quarter one year prior, going from $208.00 million to $222.00 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electric Utilities industry and the overall market on the basis of return on equity, FIRSTENERGY CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full FirstEnergy Ratings Report.
- Despite the weak revenue results, SE has outperformed against the industry average of 37.8%. Since the same quarter one year prior, revenues fell by 11.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- SPECTRA ENERGY CORP's earnings per share declined by 35.5% 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, SPECTRA ENERGY CORP increased its bottom line by earning $1.61 versus $1.55 in the prior year. For the next year, the market is expecting a contraction of 27.0% in earnings ($1.18 versus $1.61).
- The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 36.3% when compared to the same quarter one year ago, falling from $419.00 million to $267.00 million.
- The gross profit margin for SPECTRA ENERGY CORP is currently lower than what is desirable, coming in at 33.33%. It has decreased significantly from the same period last year. Despite the weak results of the gross profit margin, the net profit margin of 16.45% has significantly outperformed against the industry average.
- The share price of SPECTRA ENERGY CORP has not done very well: it is down 7.87% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Despite the decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.
- You can view the full Spectra Energy Ratings Report.
- Our dividend calendar.