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."One Liberty Properties Dividend Yield: 7.10% One Liberty Properties (NYSE: OLP) shares currently have a dividend yield of 7.10%. One Liberty Properties, Inc., a real estate investment trust (REIT), engages in the acquisition, ownership, and management of commercial real estate properties in the United States. The company has a P/E ratio of 13.39. The average volume for One Liberty Properties has been 31,000 shares per day over the past 30 days. One Liberty Properties has a market cap of $362.5 million and is part of the real estate industry. Shares are down 6.8% year-to-date as of the close of trading on Tuesday. 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 One Liberty Properties as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, reasonable valuation levels, expanding profit margins and increase in stock price during the past year. We feel its strengths outweigh the fact that the company shows weak operating cash flow. 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 Real Estate Investment Trusts (REITs) industry. The net income increased by 140.0% when compared to the same quarter one year prior, rising from $3.27 million to $7.86 million.
- 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 6.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 49.22% is the gross profit margin for ONE LIBERTY PROPERTIES INC which we consider to be strong. Regardless of OLP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OLP's net profit margin of 50.76% significantly outperformed against the industry.
- After a year of stock price fluctuations, the net result is that OLP's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full One Liberty Properties Ratings Report.
- Despite its growing revenue, the company underperformed as compared with the industry average of 5.7%. 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, displaying stagnant earnings per share.
- 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, BLACKROCK CAPITAL INVT CORP's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for BLACKROCK CAPITAL INVT CORP is rather high; currently it is at 67.90%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 73.27% significantly outperformed against the industry average.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- BLACKROCK CAPITAL INVT CORP 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, BLACKROCK CAPITAL INVT CORP increased its bottom line by earning $1.70 versus $1.20 in the prior year. For the next year, the market is expecting a contraction of 47.6% in earnings ($0.89 versus $1.70).
- You can view the full BlackRock Capital Investment Ratings Report.
- NTL's revenue growth has slightly outpaced the industry average of 2.2%. Since the same quarter one year prior, revenues slightly increased by 7.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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 Diversified Telecommunication Services industry. The net income increased by 90.5% when compared to the same quarter one year prior, rising from $62.12 million to $118.36 million.
- NORTEL INVERSORA SA has improved earnings per share by 16.7% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, NORTEL INVERSORA SA reported lower earnings of $1.14 versus $1.28 in the prior year.
- NTL has underperformed the S&P 500 Index, declining 15.65% 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.
- 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. In comparison to the other companies in the Diversified Telecommunication Services industry and the overall market, NORTEL INVERSORA SA's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full Nortel Inversora Ratings Report.
- Our dividend calendar.