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."Annaly Capital Management Dividend Yield: 12.00% Annaly Capital Management (NYSE: NLY) shares currently have a dividend yield of 12.00%. Annaly Capital Management, Inc. owns a portfolio of real estate related investments in the United States. The average volume for Annaly Capital Management has been 8,027,800 shares per day over the past 30 days. Annaly Capital Management has a market cap of $9.5 billion and is part of the real estate industry. Shares are down 7.4% 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 Annaly Capital Management as a hold. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- NLY, with its decline in revenue, underperformed when compared the industry average of 8.5%. Since the same quarter one year prior, revenues slightly dropped by 3.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for ANNALY CAPITAL MANAGEMENT is currently very high, coming in at 91.34%. Regardless of NLY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NLY's net profit margin of -80.97% significantly underperformed when compared to the industry average.
- ANNALY CAPITAL MANAGEMENT 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ANNALY CAPITAL MANAGEMENT swung to a loss, reporting -$0.96 versus $3.72 in the prior year. This year, the market expects an improvement in earnings ($1.15 versus -$0.96).
- 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 134.3% when compared to the same quarter one year ago, falling from -$203.35 million to -$476.41 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, ANNALY CAPITAL MANAGEMENT's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Annaly Capital Management Ratings Report.
- HCLP's very impressive revenue growth greatly exceeded the industry average of 18.2%. Since the same quarter one year prior, revenues leaped by 104.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, HI-CRUSH PARTNERS LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- 39.16% is the gross profit margin for HI-CRUSH PARTNERS LP which we consider to be strong. Regardless of HCLP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HCLP's net profit margin of 29.12% significantly outperformed against the industry.
- HCLP has underperformed the S&P 500 Index, declining 24.96% from its price level of one year ago. 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 debt-to-equity ratio of 1.14 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, HCLP has managed to keep a strong quick ratio of 1.66, which demonstrates the ability to cover short-term cash needs.
- You can view the full Hi-Crush Partners Ratings Report.
- 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 Oil, Gas & Consumable Fuels industry and the overall market, ONEOK INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- ONEOK INC's earnings per share declined by 34.1% 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, ONEOK INC increased its bottom line by earning $1.53 versus $1.33 in the prior year. This year, the market expects an improvement in earnings ($1.56 versus $1.53).
- OKE, with its decline in revenue, slightly underperformed the industry average of 37.8%. Since the same quarter one year prior, revenues fell by 42.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has significantly decreased to $39.27 million or 91.99% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 32.03%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 34.09% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, OKE is still more expensive than most of the other companies in its industry.
- You can view the full ONEOK Ratings Report.
- Our dividend calendar.