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."Golar LNG Partners Dividend Yield: 8.30% Golar LNG Partners (NASDAQ: GMLP) shares currently have a dividend yield of 8.30%. Golar LNG Partners LP owns and operates floating storage regasification units (FSRUs) and liquefied natural gas (LNG) carriers in Brazil, the United Arab Emirates, Indonesia, and Kuwait. As of April 29, 2015, it had a fleet of six FSRUs and four LNG carriers. The company has a P/E ratio of 12.05. The average volume for Golar LNG Partners has been 181,500 shares per day over the past 30 days. Golar LNG Partners has a market cap of $1.3 billion and is part of the transportation industry. Shares are down 10.7% year-to-date as of the close of trading on Wednesday. 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 Golar LNG Partners as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, unimpressive growth in net income and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 38.5%. Since the same quarter one year prior, revenues rose by 15.8%. 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 return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, GOLAR LNG PARTNERS LP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- The share price of GOLAR LNG PARTNERS LP has not done very well: it is down 16.05% 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. 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.
- The debt-to-equity ratio is very high at 2.25 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.49, which clearly demonstrates the inability to cover short-term cash needs.
- You can view the full Golar LNG Partners Ratings Report.
- FSFR's very impressive revenue growth greatly exceeded the industry average of 5.7%. Since the same quarter one year prior, revenues leaped by 249.1%. 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.
- The gross profit margin for FIFTH STREET SR FLTG RATE CP is currently very high, coming in at 70.70%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 55.03% significantly outperformed against the industry average.
- Net operating cash flow has increased to -$22.08 million or 45.96% when compared to the same quarter last year. Despite an increase in cash flow of 45.96%, FIFTH STREET SR FLTG RATE CP is still growing at a significantly lower rate than the industry average of 189.33%.
- FIFTH STREET SR FLTG RATE CP's earnings per share declined by 15.4% in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($1.18 versus $0.97).
- Looking at the price performance of FSFR's shares over the past 12 months, there is not much good news to report: the stock is down 31.89%, 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- You can view the full Fifth Street Senior Floating Rate Ratings Report.
- The revenue growth greatly exceeded the industry average of 38.6%. Since the same quarter one year prior, revenues slightly increased by 2.8%. 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 exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 1.4% when compared to the same quarter one year prior, going from -$1.29 million to -$1.27 million.
- The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.99 is somewhat weak and could be cause for future problems.
- The gross profit margin for AZURE MIDSTREAM PARTNERS LP is currently lower than what is desirable, coming in at 28.94%. Regardless of FISH's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, FISH's net profit margin of -9.89% significantly underperformed when compared to the industry average.
- Net operating cash flow has significantly decreased to -$2.60 million or 129.37% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full Azure Midstream Partners Ratings Report.
- Our dividend calendar.