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."Scorpio Tankers Dividend Yield: 5.10% Scorpio Tankers (NYSE: STNG) shares currently have a dividend yield of 5.10%. Scorpio Tankers Inc., together with its subsidiaries, engages in the seaborne transportation of refined petroleum products and crude oil worldwide. The company has a P/E ratio of 36.11. The average volume for Scorpio Tankers has been 2,145,000 shares per day over the past 30 days. Scorpio Tankers has a market cap of $1.6 billion and is part of the transportation industry. Shares are up 10.7% 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 Scorpio Tankers as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and deteriorating net income. Highlights from the ratings report include:
- STNG's very impressive revenue growth greatly exceeded the industry average of 38.5%. Since the same quarter one year prior, revenues leaped by 109.4%. 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.
- The gross profit margin for SCORPIO TANKERS INC is rather high; currently it is at 57.50%. It has increased significantly from the same period last year. Along with this, the net profit margin of 25.32% significantly outperformed against the industry average.
- SCORPIO TANKERS INC's earnings per share declined by 10.7% 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, SCORPIO TANKERS INC increased its bottom line by earning $0.27 versus $0.14 in the prior year. This year, the market expects an improvement in earnings ($0.92 versus $0.27).
- The debt-to-equity ratio of 1.48 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, STNG maintains a poor quick ratio of 0.87, which illustrates the inability to avoid short-term cash problems.
- 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 Oil, Gas & Consumable Fuels industry and the overall market, SCORPIO TANKERS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Scorpio Tankers Ratings Report.
- CXP's revenue growth has slightly outpaced the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 14.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- COLUMBIA PROPERTY TRUST INC has improved earnings per share by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, COLUMBIA PROPERTY TRUST INC increased its bottom line by earning $0.76 versus $0.21 in the prior year. For the next year, the market is expecting a contraction of 84.2% in earnings ($0.12 versus $0.76).
- The gross profit margin for COLUMBIA PROPERTY TRUST INC is rather low; currently it is at 18.32%. Regardless of CXP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CXP's net profit margin of 3.74% is significantly lower than the industry average.
- Net operating cash flow has decreased to $44.53 million or 22.94% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full Columbia Property Ratings Report.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 8.8% when compared to the same quarter one year prior, going from $340.00 million to $370.00 million.
- 44.68% is the gross profit margin for POTASH CORP SASK INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.22% is above that of the industry average.
- The current debt-to-equity ratio, 0.47, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that POT's debt-to-equity ratio is low, the quick ratio, which is currently 0.68, displays a potential problem in covering short-term cash needs.
- POT has underperformed the S&P 500 Index, declining 13.39% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- Net operating cash flow has declined marginally to $521.00 million or 3.33% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full Potash Corp of Saskatchewan Ratings Report.
- Our dividend calendar.