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." Marlin Midstream Partners Dividend Yield: 7.40% Marlin Midstream Partners (NASDAQ: FISH) shares currently have a dividend yield of 7.40%. Marlin Midstream Partners, LP, together with its subsidiaries, acquires, owns, develops, and operates midstream energy assets in the United States. The company operates through two segments, Midstream Natural Gas and Crude Oil Logistics. The company has a P/E ratio of 16.32. The average volume for Marlin Midstream Partners has been 68,400 shares per day over the past 30 days. Marlin Midstream Partners has a market cap of $177.3 million and is part of the energy industry. Shares are up 8.6% 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 Marlin Midstream Partners as a hold. The company's strongest point has been its expanding profit margins. At the same time, however, we find that the growth in the company's net income has been quite unimpressive. Highlights from the ratings report include:
- MARLIN MIDSTREAM PARTNERS LP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, MARLIN MIDSTREAM PARTNERS LP increased its bottom line by earning $1.22 versus $0.36 in the prior year. This year, the market expects an improvement in earnings ($1.36 versus $1.22).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 37.8%. Since the same quarter one year prior, revenues fell by 31.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- The gross profit margin for MARLIN MIDSTREAM PARTNERS LP is currently lower than what is desirable, coming in at 28.94%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -9.89% is significantly below that of 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 124.7% when compared to the same quarter one year ago, falling from $5.13 million to -$1.27 million.
- You can view the full Marlin Midstream Partners Ratings Report.