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." Carlyle Group L P Dividend Yield: 4.50% Carlyle Group L P (NASDAQ: CG) shares currently have a dividend yield of 4.50%. The Carlyle Group LP is an investment firm specializing in direct and fund of fund investments. The company has a P/E ratio of 21.52. The average volume for Carlyle Group L P has been 745,300 shares per day over the past 30 days. Carlyle Group L P has a market cap of $2.0 billion and is part of the financial services industry. Shares are up 6.4% 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 Carlyle Group L P as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, notable return on equity and growth in earnings per share. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. 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 Capital Markets industry. The net income increased by 60.6% when compared to the same quarter one year prior, rising from $24.60 million to $39.50 million.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Capital Markets industry and the overall market, CARLYLE GROUP LP's return on equity exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has increased to $1,475.00 million or 49.02% when compared to the same quarter last year. Despite an increase in cash flow of 49.02%, CARLYLE GROUP LP is still growing at a significantly lower rate than the industry average of 189.33%.
- 36.88% is the gross profit margin for CARLYLE GROUP LP which we consider to be strong. Regardless of CG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CG's net profit margin of 3.47% is significantly lower than the industry average.
- CG has underperformed the S&P 500 Index, declining 8.42% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full Carlyle Group L P Ratings Report.
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.5%. Since the same quarter one year prior, revenues slightly increased by 3.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- Net operating cash flow has increased to $71.13 million or 22.31% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.76%.
- RETAIL PPTYS OF AMERICA INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, RETAIL PPTYS OF AMERICA INC turned its bottom line around by earning $0.15 versus -$0.20 in the prior year. For the next year, the market is expecting a contraction of 26.7% in earnings ($0.11 versus $0.15).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Real Estate Investment Trusts (REITs) industry average, but is greater than that of the S&P 500. The net income has decreased by 7.4% when compared to the same quarter one year ago, dropping from $14.13 million to $13.08 million.
- In its most recent trading session, RPAI 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, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- You can view the full Retail Properties of America Ratings Report.
- RDS.B's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.90 is somewhat weak and could be cause for future problems.
- ROYAL DUTCH SHELL PLC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ROYAL DUTCH SHELL PLC reported lower earnings of $4.70 versus $5.18 in the prior year. This year, the market expects an improvement in earnings ($7.41 versus $4.70).
- Net operating cash flow has decreased to $7,106.00 million or 49.18% when compared to the same quarter last year. Despite a decrease in cash flow of 49.18%, ROYAL DUTCH SHELL PLC is in line with the industry average cash flow growth rate of -53.19%.
- Looking at the price performance of RDS.B's shares over the past 12 months, there is not much good news to report: the stock is down 28.29%, 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. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full Royal Dutch Shell Ratings Report.
- Our dividend calendar.