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." EPR Properties Dividend Yield: 6.10% EPR Properties (NYSE: EPR) shares currently have a dividend yield of 6.10%. EPR Properties is a real estate investment trust. It invests in the real estate markets of United States and Canada. The firm develops, owns, leases and finances properties in select market segments primarily related to entertainment, education and recreation. The company has a P/E ratio of 21.37. The average volume for EPR Properties has been 295,400 shares per day over the past 30 days. EPR Properties has a market cap of $3.4 billion and is part of the real estate industry. Shares are up 2.8% year-to-date as of the close of trading on Monday. 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 EPR Properties as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel its strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- EPR's revenue growth has slightly outpaced the industry average of 8.4%. Since the same quarter one year prior, revenues rose by 10.5%. 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 $57.52 million or 38.49% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -0.03%.
- The gross profit margin for EPR PROPERTIES is rather high; currently it is at 64.76%. Regardless of EPR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EPR's net profit margin of 42.98% significantly outperformed against the industry.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
- EPR PROPERTIES' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, EPR PROPERTIES reported lower earnings of $2.78 versus $3.13 in the prior year. This year, the market expects an improvement in earnings ($2.82 versus $2.78).
- You can view the full EPR Properties Ratings Report.