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." Columbia Property Dividend Yield: 4.40% Columbia Property (NYSE: CXP) shares currently have a dividend yield of 4.40%. Columbia Property Trust, Inc is an equity real estate investment trust. The firm invests in the real estate markets of the United States. It focuses on investing in and managing high-quality commercial office properties. The firm was formerly known as Wells Real Estate Investment Trust II Inc. The company has a P/E ratio of 35.10. The average volume for Columbia Property has been 714,900 shares per day over the past 30 days. Columbia Property has a market cap of $3.4 billion and is part of the real estate industry. Shares are up 6.6% 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 Columbia Property as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including poor profit margins, weak operating cash flow and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- CXP's revenue growth has slightly outpaced the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 14.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- COLUMBIA PROPERTY TRUST INC has improved earnings per share by 33.3% 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, COLUMBIA PROPERTY TRUST INC increased its bottom line by earning $0.76 versus $0.21 in the prior year. For the next year, the market is expecting a contraction of 73.7% in earnings ($0.20 versus $0.76).
- Net operating cash flow has decreased to $44.53 million or 22.94% when compared to the same quarter last year. Despite a decrease in cash flow COLUMBIA PROPERTY TRUST INC is still fairing well by exceeding its industry average cash flow growth rate of -51.19%.
- The gross profit margin for COLUMBIA PROPERTY TRUST INC is rather low; currently it is at 18.32%. Regardless of CXP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CXP's net profit margin of 3.74% is significantly lower than the industry average.
- You can view the full Columbia Property 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 32.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 811.8% when compared to the same quarter one year prior, rising from $2.20 million to $20.01 million.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- 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, EXCEL TRUST INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for EXCEL TRUST INC is rather low; currently it is at 20.36%. It has decreased from the same quarter the previous year. Despite the weak results of the gross profit margin, the net profit margin of 49.20% has significantly outperformed against the industry average.
- You can view the full Excel 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 36.8%. 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 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 Real Estate Investment Trusts (REITs) industry average. The net income increased by 17.0% when compared to the same quarter one year prior, going from $9.36 million to $10.96 million.
- Compared to its closing price of one year ago, SUI's share price has jumped by 29.70%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, SUN COMMUNITIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for SUN COMMUNITIES INC is rather low; currently it is at 19.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 7.17% significantly trails the industry average.
- You can view the full Sun Communities Ratings Report.
- Our dividend calendar.