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." Suburban Propane Partners Dividend Yield: 8.20% Suburban Propane Partners (NYSE: SPH) shares currently have a dividend yield of 8.20%. Suburban Propane Partners, L.P., through its subsidiaries, engages in the retail marketing and distribution of propane, fuel oil, and refined fuels. The company has a P/E ratio of 33.62. The average volume for Suburban Propane Partners has been 119,400 shares per day over the past 30 days. Suburban Propane Partners has a market cap of $2.6 billion and is part of the utilities industry. Shares are down 0.7% 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 Suburban Propane Partners as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- 37.83% is the gross profit margin for SUBURBAN PROPANE PRTNRS -LP which we consider to be strong. It has increased significantly from the same period last year. Along with this, the net profit margin of 22.79% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 678.57% to $126.33 million when compared to the same quarter last year. In addition, SUBURBAN PROPANE PRTNRS -LP has also vastly surpassed the industry average cash flow growth rate of 25.69%.
- SUBURBAN PROPANE PRTNRS -LP's earnings per share declined by 8.9% 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, SUBURBAN PROPANE PRTNRS -LP increased its bottom line by earning $1.55 versus $1.44 in the prior year. This year, the market expects an improvement in earnings ($2.01 versus $1.55).
- SPH, with its decline in revenue, underperformed when compared the industry average of 20.4%. Since the same quarter one year prior, revenues fell by 31.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The debt-to-equity ratio of 1.11 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, SPH has managed to keep a strong quick ratio of 1.73, which demonstrates the ability to cover short-term cash needs.
- You can view the full Suburban Propane Partners Ratings Report.
- Despite its growing revenue, the company underperformed as compared with the industry average of 5.8%. 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, displayed by a decline in earnings per share.
- The gross profit margin for SOLAR SENIOR CAPITAL LTD is currently very high, coming in at 79.92%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 67.92% significantly outperformed against the industry average.
- SOLAR SENIOR CAPITAL LTD's earnings per share declined by 28.6% 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, SOLAR SENIOR CAPITAL LTD reported lower earnings of $1.02 versus $1.11 in the prior year. This year, the market expects an improvement in earnings ($1.37 versus $1.02).
- In its most recent trading session, SUNS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- Net operating cash flow has significantly decreased to -$123.12 million or 354.07% 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 Solar Senior Capital Ratings Report.
- 39.23% is the gross profit margin for BLUEKNIGHT ENERGY PRTNRS LP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 3.72% trails the industry average.
- Despite the weak revenue results, BKEP has outperformed against the industry average of 38.6%. Since the same quarter one year prior, revenues slightly dropped by 8.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- BLUEKNIGHT ENERGY PRTNRS LP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, BLUEKNIGHT ENERGY PRTNRS LP reported lower earnings of $0.15 versus $0.24 in the prior year. This year, the market expects earnings to be in line with last year ($0.15 versus $0.15).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 59.4% when compared to the same quarter one year ago, falling from $3.89 million to $1.58 million.
- The share price of BLUEKNIGHT ENERGY PRTNRS LP has not done very well: it is down 14.32% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Despite the decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.
- You can view the full Blueknight Energy Partners Ratings Report.
- Our dividend calendar.