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: 7.90% NGL Energy Partners (NYSE: NGL) shares currently have a dividend yield of 7.90%. 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 476,800 shares per day over the past 30 days. NGL Energy Partners has a market cap of $3.3 billion and is part of the energy industry. Shares are up 9% 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 NGL Energy Partners as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and a generally disappointing performance in the stock itself. 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 105.0% when compared to the same quarter one year prior, rising from $42.33 million to $86.78 million.
- NGL ENERGY PARTNERS LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NGL ENERGY PARTNERS LP swung to a loss, reporting -$0.39 versus $0.32 in the prior year. This year, the market expects an improvement in earnings ($0.68 versus -$0.39).
- Despite the weak revenue results, NGL has outperformed against the industry average of 38.6%. Since the same quarter one year prior, revenues fell by 19.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The debt-to-equity ratio of 1.29 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, NGL maintains a poor quick ratio of 0.97, which illustrates the inability to avoid short-term cash problems.
- 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.
- You can view the full NGL Energy Partners Ratings Report.
- The revenue growth greatly exceeded the industry average of 17.4%. 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 26.4% in earnings ($2.15 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.
- The current debt-to-equity ratio, 0.58, 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 0.81 is somewhat weak and could be cause for future problems.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 38.6%. Since the same quarter one year prior, revenues fell by 32.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The change in net income from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 20.1% when compared to the same quarter one year ago, dropping from $3,335.00 million to $2,663.00 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TOTAL SA's return on equity significantly trails that of both the industry average and the S&P 500.
- Looking at the price performance of TOT's shares over the past 12 months, there is not much good news to report: the stock is down 26.55%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- You can view the full Total Ratings Report.
- Our dividend calendar.