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."TAL International Group Dividend Yield: 7.80% TAL International Group (NYSE: TAL) shares currently have a dividend yield of 7.80%. TAL International Group, Inc., together with its subsidiaries, leases intermodal transportation equipment and provides maritime container management services worldwide. The company operates in two segments, Equipment Leasing and Equipment Trading. The company has a P/E ratio of 10.34. The average volume for TAL International Group has been 207,500 shares per day over the past 30 days. TAL International Group has a market cap of $1.2 billion and is part of the diversified services industry. Shares are down 15.2% 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 TAL International Group as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share. Highlights from the ratings report include:
- TAL's revenue growth has slightly outpaced the industry average of 5.3%. Since the same quarter one year prior, revenues slightly increased by 5.4%. 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.
- Net operating cash flow has increased to $91.25 million or 22.59% when compared to the same quarter last year. In addition, TAL INTERNATIONAL GROUP INC has also modestly surpassed the industry average cash flow growth rate of 21.39%.
- The gross profit margin for TAL INTERNATIONAL GROUP INC is currently very high, coming in at 85.37%. Regardless of TAL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TAL's net profit margin of 15.53% compares favorably to the industry average.
- 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 Trading Companies & Distributors industry and the overall market on the basis of return on equity, TAL INTERNATIONAL GROUP INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, TAL has underperformed the S&P 500 Index, declining 11.82% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- You can view the full TAL International Group Ratings Report.
- GBDC's revenue growth has slightly outpaced the industry average of 5.4%. Since the same quarter one year prior, revenues slightly increased by 7.7%. 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 GOLUB CAPITAL BDC INC is currently very high, coming in at 73.52%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 55.08% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 70.59% to -$40.85 million when compared to the same quarter last year. Despite an increase in cash flow of 70.59%, GOLUB CAPITAL BDC INC is still growing at a significantly lower rate than the industry average of 244.87%.
- 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 Capital Markets industry and the overall market on the basis of return on equity, GOLUB CAPITAL BDC INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- In its most recent trading session, GBDC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full Golub Capital BDC Ratings Report.
- Compared to its closing price of one year ago, NVEC's share price has jumped by 36.64%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NVEC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- NVEC has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 21.67, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for NVE CORP is currently very high, coming in at 80.29%. Regardless of NVEC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NVEC's net profit margin of 44.39% significantly outperformed against the industry.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Semiconductors & Semiconductor Equipment industry average. The net income increased by 0.5% when compared to the same quarter one year prior, going from $2.78 million to $2.79 million.
- NVE CORP reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, NVE CORP reported lower earnings of $2.29 versus $2.43 in the prior year. This year, the market expects an improvement in earnings ($3.30 versus $2.29).
- You can view the full NVE Ratings Report.
- Our dividend calendar.