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.