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." Banco Santander Chile Dividend Yield: 5.20% Banco Santander Chile (NYSE: BSAC) shares currently have a dividend yield of 5.20%. Banco Santander-Chile provides commercial and retail banking services in Chile. It operates through two segments, Commercial Banking, and Global Banking and Markets. The company has a P/E ratio of 0.01. The average volume for Banco Santander Chile has been 511,300 shares per day over the past 30 days. Banco Santander Chile has a market cap of $10.3 billion and is part of the banking industry. Shares are up 11.1% year-to-date as of the close of trading on Monday. 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 Banco Santander Chile as a hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- The gross profit margin for BANCO SANTANDER-CHILE is rather high; currently it is at 58.92%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, BSAC's net profit margin of 18.99% significantly trails the industry average.
- The revenue fell significantly faster than the industry average of 0.1%. Since the same quarter one year prior, revenues fell by 30.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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 Commercial Banks industry and the overall market, BANCO SANTANDER-CHILE's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- The share price of BANCO SANTANDER-CHILE has not done very well: it is down 13.07% 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. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- 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 Commercial Banks industry. The net income has significantly decreased by 40.9% when compared to the same quarter one year ago, falling from $258.01 million to $152.38 million.
- You can view the full Banco Santander Chile Ratings Report.
- The revenue growth came in higher than the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 19.1%. 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 ALTISOURCE RESIDENTIAL CORP is rather low; currently it is at 24.82%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 13.97% significantly trails the industry average.
- 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 70.3% when compared to the same quarter one year ago, falling from $41.91 million to $12.42 million.
- You can view the full Altisource Residential Corporation Ratings Report.
- PKY's revenue growth has slightly outpaced the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 15.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- PARKWAY PROPERTIES 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, PARKWAY PROPERTIES INC turned its bottom line around by earning $0.29 versus -$0.60 in the prior year. For the next year, the market is expecting a contraction of 220.7% in earnings (-$0.35 versus $0.29).
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, PARKWAY PROPERTIES INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- 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 greatly underperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income has significantly decreased by 32.9% when compared to the same quarter one year ago, falling from $10.85 million to $7.28 million.
- PKY has underperformed the S&P 500 Index, declining 7.39% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- You can view the full Parkway Properties Ratings Report.
- Our dividend calendar.