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." New York Mortgage Dividend Yield: 14.00% New York Mortgage (NASDAQ: NYMT) shares currently have a dividend yield of 14.00%. New York Mortgage Trust, Inc., a real estate investment trust (REIT), engages in acquiring, investing in, financing, and managing mortgage-related and financial assets in the United States. The company has a P/E ratio of 5.50. The average volume for New York Mortgage has been 1,179,800 shares per day over the past 30 days. New York Mortgage has a market cap of $818.5 million and is part of the real estate industry. Shares are down 0.1% 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 New York Mortgage as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, attractive valuation levels and increase in net income. However, as a counter to these strengths, we also find weaknesses including poor profit margins and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- 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 Real Estate Investment Trusts (REITs) industry and the overall market, NEW YORK MORTGAGE TRUST INC's return on equity exceeds that of both the industry average and the S&P 500.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 3.7% when compared to the same quarter one year prior, going from $22.71 million to $23.54 million.
- NEW YORK MORTGAGE TRUST INC's earnings per share declined by 27.6% 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, NEW YORK MORTGAGE TRUST INC increased its bottom line by earning $1.47 versus $1.11 in the prior year. For the next year, the market is expecting a contraction of 31.3% in earnings ($1.01 versus $1.47).
- The gross profit margin for NEW YORK MORTGAGE TRUST INC is currently lower than what is desirable, coming in at 26.18%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 23.41% trails that of the industry average.
- You can view the full New York Mortgage Ratings Report.