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." Alliance Holdings GP Dividend Yield: 7.50% Alliance Holdings GP (NASDAQ: AHGP) shares currently have a dividend yield of 7.50%. Alliance Holdings GP, L.P., through its subsidiaries, produces and markets coal primarily to utilities and industrial users in the United States. It produces a range of steam coal with varying sulfur and heat contents. The company has a P/E ratio of 10.56. The average volume for Alliance Holdings GP has been 73,000 shares per day over the past 30 days. Alliance Holdings GP has a market cap of $3.0 billion and is part of the metals & mining industry. Shares are down 18.7% year-to-date as of the close of trading on Wednesday. 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 Alliance Holdings GP as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, attractive valuation levels, good cash flow from operations and expanding profit margins. 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 greatly exceeded the industry average of 38.6%. Since the same quarter one year prior, revenues slightly increased by 3.4%. 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 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, ALLIANCE HOLDINGS GP LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has increased to $161.06 million or 15.42% when compared to the same quarter last year. In addition, ALLIANCE HOLDINGS GP LP has also vastly surpassed the industry average cash flow growth rate of -53.17%.
- 38.99% is the gross profit margin for ALLIANCE HOLDINGS GP LP which we consider to be strong. Regardless of AHGP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AHGP's net profit margin of 11.69% compares favorably to the industry average.
- You can view the full Alliance Holdings GP Ratings Report.
- The revenue growth significantly trails the industry average of 36.9%. Since the same quarter one year prior, revenues slightly increased by 5.1%. 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 GRUPO AEROPORTUARIO DEL CENT is rather high; currently it is at 62.35%. It has increased from the same quarter the previous year.
- Net operating cash flow has significantly increased by 108.38% to $33.66 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 77.28%.
- OMAB's debt-to-equity ratio of 0.75 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 4.14 is very high and demonstrates very strong liquidity.
- GRUPO AEROPORTUARIO DEL CENT's earnings per share declined by 15.0% in the most recent quarter compared to the same quarter a year ago. 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, GRUPO AEROPORTUARIO DEL CENT reported lower earnings of $1.40 versus $1.84 in the prior year. This year, the market expects an improvement in earnings ($1.56 versus $1.40).
- You can view the full Grupo Aeroportuario del Centro Norte SAB de Ratings Report.
- MNDO's revenue growth has slightly outpaced the industry average of 4.9%. Since the same quarter one year prior, revenues slightly increased by 0.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- MNDO 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. Along with this, the company maintains a quick ratio of 2.55, which clearly demonstrates the ability to cover short-term cash needs.
- 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 Software industry and the overall market, MIND CTI LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has significantly increased by 59.98% to $1.65 million when compared to the same quarter last year. In addition, MIND CTI LTD has also vastly surpassed the industry average cash flow growth rate of -17.70%.
- You can view the full Mind C T I Ratings Report.
- Our dividend calendar.