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."South Jersey Industries Dividend Yield: 7.50% South Jersey Industries (NYSE: SJI) shares currently have a dividend yield of 7.50%. South Jersey Industries, Inc., through its subsidiaries, provides energy related products and services. It engages in the purchase, transmission, and sale of natural gas. The company has a P/E ratio of 17.76. The average volume for South Jersey Industries has been 311,100 shares per day over the past 30 days. South Jersey Industries has a market cap of $1.8 billion and is part of the utilities industry. Shares are down 9.4% 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 South Jersey Industries as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income and notable return on equity. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 20.4%. Since the same quarter one year prior, revenues slightly increased by 9.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- SOUTH JERSEY INDUSTRIES INC has improved earnings per share by 6.8% 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 year. We feel that this trend should continue. During the past fiscal year, SOUTH JERSEY INDUSTRIES INC increased its bottom line by earning $1.47 versus $1.29 in the prior year. This year, the market expects an improvement in earnings ($1.69 versus $1.47).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Gas Utilities industry. The net income increased by 11.9% when compared to the same quarter one year prior, going from $47.90 million to $53.58 million.
- 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 Gas Utilities industry and the overall market on the basis of return on equity, SOUTH JERSEY INDUSTRIES INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The gross profit margin for SOUTH JERSEY INDUSTRIES INC is rather low; currently it is at 24.33%. Regardless of SJI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SJI's net profit margin of 13.99% compares favorably to the industry average.
- You can view the full South Jersey Industries Ratings Report.
- LOAN's very impressive revenue growth greatly exceeded the industry average of 7.0%. Since the same quarter one year prior, revenues leaped by 53.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Powered by its strong earnings growth of 200.00% and other important driving factors, this stock has surged by 110.26% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, LOAN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- MANHATTAN BRIDGE CAPITAL INC 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. During the past fiscal year, MANHATTAN BRIDGE CAPITAL INC increased its bottom line by earning $0.29 versus $0.15 in the prior year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Financial Services industry. The net income increased by 584.5% when compared to the same quarter one year prior, rising from $0.06 million to $0.40 million.
- You can view the full Manhattan Bridge Capital Ratings Report.
- Despite its growing revenue, the company underperformed as compared with the industry average of 5.2%. Since the same quarter one year prior, revenues slightly increased by 4.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Capital Markets industry and the overall market, BLACKROCK CAPITAL INVT CORP's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for BLACKROCK CAPITAL INVT CORP is rather high; currently it is at 67.90%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 73.27% significantly outperformed against the industry average.
- 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.
- BLACKROCK CAPITAL INVT CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, BLACKROCK CAPITAL INVT CORP increased its bottom line by earning $1.70 versus $1.20 in the prior year. For the next year, the market is expecting a contraction of 46.2% in earnings ($0.92 versus $1.70).
- You can view the full BlackRock Capital Investment Ratings Report.
- Our dividend calendar.