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." Teekay LNG Partners Dividend Yield: 7.90% Teekay LNG Partners (NYSE: TGP) shares currently have a dividend yield of 7.90%. Teekay LNG Partners L.P. provides marine transportation services for liquefied natural gas (LNG), liquefied petroleum gas (LPG), and crude oil worldwide. The company has a P/E ratio of 14.27. The average volume for Teekay LNG Partners has been 259,500 shares per day over the past 30 days. Teekay LNG Partners has a market cap of $2.8 billion and is part of the transportation industry. Shares are down 18.5% year-to-date as of the close of trading on Friday. 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 Teekay LNG Partners as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 67.3% when compared to the same quarter one year prior, rising from $38.25 million to $63.97 million.
- The gross profit margin for TEEKAY LNG PARTNERS LP is currently very high, coming in at 77.44%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 65.72% significantly outperformed against the industry average.
- 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 Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, TEEKAY LNG PARTNERS LP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- TGP has underperformed the S&P 500 Index, declining 18.92% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The debt-to-equity ratio of 1.24 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.45, which clearly demonstrates the inability to cover short-term cash needs.
- You can view the full Teekay LNG Partners Ratings Report.
- The revenue growth greatly exceeded the industry average of 38.6%. Since the same quarter one year prior, revenues slightly increased by 2.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 1.4% when compared to the same quarter one year prior, going from -$1.29 million to -$1.27 million.
- The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.99 is somewhat weak and could be cause for future problems.
- The gross profit margin for AZURE MIDSTREAM PARTNERS LP is currently lower than what is desirable, coming in at 28.94%. Regardless of FISH's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, FISH's net profit margin of -9.89% significantly underperformed when compared to the industry average.
- Net operating cash flow has significantly decreased to -$2.60 million or 129.37% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full Azure Midstream Partners Ratings Report.
- ELRC 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.
- The gross profit margin for ELECTRO RENT CORP is rather high; currently it is at 57.15%. Regardless of ELRC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.30% 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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 46.5% when compared to the same quarter one year ago, falling from $4.54 million to $2.43 million.
- 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. When compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, ELECTRO RENT CORP's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Electro Rent Ratings Report.
- Our dividend calendar.