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." Exterran Partners Dividend Yield: 8.80% Exterran Partners (NASDAQ: EXLP) shares currently have a dividend yield of 8.80%. Exterran Partners, L.P., together with its subsidiaries, provides natural gas contract operations services to customers in the United States. The company has a P/E ratio of 23.56. The average volume for Exterran Partners has been 136,700 shares per day over the past 30 days. Exterran Partners has a market cap of $1.5 billion and is part of the energy industry. Shares are up 14.4% 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 Exterran Partners as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, expanding profit margins, good cash flow from operations and growth in earnings per share. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 1.7%. Since the same quarter one year prior, revenues rose by 35.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 189.4% when compared to the same quarter one year prior, rising from $6.94 million to $20.09 million.
- 47.45% is the gross profit margin for EXTERRAN PARTNERS LP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 12.22% is above that of the industry average.
- Net operating cash flow has significantly increased by 71.94% to $78.07 million when compared to the same quarter last year. In addition, EXTERRAN PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of 12.24%.
- EXTERRAN 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, EXTERRAN PARTNERS LP reported lower earnings of $0.88 versus $1.18 in the prior year. This year, the market expects an improvement in earnings ($1.09 versus $0.88).
- You can view the full Exterran Partners Ratings Report.
- TAL's revenue growth has slightly outpaced the industry average of 5.0%. Since the same quarter one year prior, revenues slightly increased by 5.4%. 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.
- Net operating cash flow has increased to $91.25 million or 22.59% when compared to the same quarter last year. Despite an increase in cash flow, TAL INTERNATIONAL GROUP INC's average is still marginally south of the industry average growth rate of 23.33%.
- The gross profit margin for TAL INTERNATIONAL GROUP INC is currently very high, coming in at 85.37%. Regardless of TAL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TAL's net profit margin of 15.53% compares favorably to the industry average.
- 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 Trading Companies & Distributors industry and the overall market on the basis of return on equity, TAL INTERNATIONAL GROUP INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, TAL has underperformed the S&P 500 Index, declining 17.87% from its price level of one year ago. 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.
- You can view the full TAL International Group Ratings Report.
- CCLP's very impressive revenue growth greatly exceeded the industry average of 1.7%. Since the same quarter one year prior, revenues leaped by 245.1%. 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.
- 41.58% is the gross profit margin for CSI COMPRESSCO LP which we consider to be strong. Regardless of CCLP'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 1.75% trails the industry average.
- The share price of CSI COMPRESSCO LP has not done very well: it is down 16.98% 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 stock's decline during the last year, it is still somewhat more expensive (in proportion to its earnings over the last year) than most other stocks in its industry. We feel, however, that other strengths this company displays offset this slight negative.
- CSI COMPRESSCO 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, CSI COMPRESSCO LP reported lower earnings of $0.61 versus $1.11 in the prior year. For the next year, the market is expecting a contraction of 41.8% in earnings ($0.36 versus $0.61).
- 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 Energy Equipment & Services industry. The net income has significantly decreased by 60.9% when compared to the same quarter one year ago, falling from $4.62 million to $1.81 million.
- You can view the full CSI Compressco Ratings Report.
- Our dividend calendar.