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." NGL Energy Partners Dividend Yield: 8.30% NGL Energy Partners (NYSE: NGL) shares currently have a dividend yield of 8.30%. NGL Energy Partners LP, through its subsidiaries, is primarily engaged in the crude oil logistics, water solutions, liquids, and retail propane businesses in the United States. It operates through Crude Oil Logistics, Water Solutions, Liquids, and Retail Propane segments. The average volume for NGL Energy Partners has been 557,600 shares per day over the past 30 days. NGL Energy Partners has a market cap of $2.7 billion and is part of the energy industry. Shares are up 8.2% year-to-date as of the close of trading on Thursday. 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 NGL Energy Partners as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk. Highlights from the ratings report include:
- NGL's very impressive revenue growth greatly exceeded the industry average of 38.3%. Since the same quarter one year prior, revenues leaped by 65.9%. 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 $143.48 million or 26.39% when compared to the same quarter last year. In addition, NGL ENERGY PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -53.10%.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 25.81%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 196.29% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- 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 Oil, Gas & Consumable Fuels industry and the overall market, NGL ENERGY PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for NGL ENERGY PARTNERS LP is currently extremely low, coming in at 5.32%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.23% trails that of the industry average.
- You can view the full NGL Energy Partners Ratings Report.
- The revenue growth came in higher than the industry average of 8.4%. Since the same quarter one year prior, revenues rose by 19.1%. 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 ALTISOURCE RESIDENTIAL CORP is rather low; currently it is at 24.82%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 13.97% significantly trails the industry average.
- 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 70.3% when compared to the same quarter one year ago, falling from $41.91 million to $12.42 million.
- You can view the full Altisource Residential Corporation Ratings Report.
- The revenue growth greatly exceeded the industry average of 17.6%. Since the same quarter one year prior, revenues rose by 44.7%. 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.
- HI-CRUSH PARTNERS LP has improved earnings per share by 22.4% 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, HI-CRUSH PARTNERS LP increased its bottom line by earning $2.92 versus $2.08 in the prior year. For the next year, the market is expecting a contraction of 26.0% in earnings ($2.16 versus $2.92).
- The debt-to-equity ratio of 1.22 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 1.89, which demonstrates the ability to cover short-term cash needs.
- The gross profit margin for HI-CRUSH PARTNERS LP is currently lower than what is desirable, coming in at 34.73%. It has decreased from the same quarter the previous year. Despite the weak results of the gross profit margin, the net profit margin of 23.19% has significantly outperformed against the industry average.
- You can view the full Hi-Crush Partners Ratings Report.
- Our dividend calendar.