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." B&G Foods Dividend Yield: 4.60% B&G Foods (NYSE: BGS) shares currently have a dividend yield of 4.60%. B&G Foods, Inc. manufactures, sells, and distributes shelf-stable food and household products in the United States, Canada, and Puerto Rico. The company has a P/E ratio of 39.16. The average volume for B&G Foods has been 455,000 shares per day over the past 30 days. B&G Foods has a market cap of $1.6 billion and is part of the food & beverage industry. Shares are down 0.5% year-to-date as of the close of trading on Tuesday. 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 B&G Foods as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and growth in earnings per share. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 10.3%. Since the same quarter one year prior, revenues slightly increased by 9.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- 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 Food Products industry average. The net income increased by 10.1% when compared to the same quarter one year prior, going from $17.78 million to $19.57 million.
- B&G FOODS INC has improved earnings per share by 9.1% 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, B&G FOODS INC reported lower earnings of $0.76 versus $0.98 in the prior year. This year, the market expects an improvement in earnings ($1.52 versus $0.76).
- BGS has underperformed the S&P 500 Index, declining 6.95% from its price level of one year ago. 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.
- The debt-to-equity ratio is very high at 3.04 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, BGS maintains a poor quick ratio of 0.93, which illustrates the inability to avoid short-term cash problems.
- You can view the full B&G Foods Ratings Report.