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." Macquarie Infrastructure Dividend Yield: 5.00% Macquarie Infrastructure (NYSE: MIC) shares currently have a dividend yield of 5.00%. Macquarie Infrastructure Company LLC, through its subsidiaries, owns, operates, and invests in infrastructure businesses that provide services to businesses and individuals primarily in the United States. The company has a P/E ratio of 5.87. The average volume for Macquarie Infrastructure has been 540,100 shares per day over the past 30 days. Macquarie Infrastructure has a market cap of $6.8 billion and is part of the transportation industry. Shares are up 20.6% 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 Macquarie Infrastructure as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, reasonable valuation levels, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- MIC's revenue growth has slightly outpaced the industry average of 36.4%. Since the same quarter one year prior, revenues rose by 44.3%. 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.
- Compared to its closing price of one year ago, MIC's share price has jumped by 38.72%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- 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 Transportation Infrastructure industry and the overall market, MACQUARIE INFRASTRUCT CO LLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for MACQUARIE INFRASTRUCT CO LLC is rather high; currently it is at 56.70%. It has increased significantly from the same period last year.
- You can view the full Macquarie Infrastructure Ratings Report.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 990.7% when compared to the same quarter one year prior, rising from -$97.00 million to $864.00 million.
- 37.16% is the gross profit margin for DUKE ENERGY CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.24% is above that of the industry average.
- DUKE ENERGY CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DUKE ENERGY CORP increased its bottom line by earning $4.65 versus $3.63 in the prior year. This year, the market expects an improvement in earnings ($4.66 versus $4.65).
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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.
- Net operating cash flow has slightly increased to $1,440.00 million or 4.87% when compared to the same quarter last year. Despite an increase in cash flow, DUKE ENERGY CORP's average is still marginally south of the industry average growth rate of 10.36%.
- You can view the full Duke Energy Corporation Ratings Report.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Multi-Utilities industry. The net income increased by 107.3% when compared to the same quarter one year prior, rising from $193.00 million to $400.00 million.
- Net operating cash flow has increased to $195.00 million or 41.30% when compared to the same quarter last year. In addition, SCANA CORP has also modestly surpassed the industry average cash flow growth rate of 33.52%.
- 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 Multi-Utilities industry and the overall market on the basis of return on equity, SCANA CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- SCANA CORP reported significant earnings per share improvement 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, SCANA CORP increased its bottom line by earning $3.79 versus $3.38 in the prior year. For the next year, the market is expecting a contraction of 2.4% in earnings ($3.70 versus $3.79).
- You can view the full SCANA Ratings Report.
- Our dividend calendar.