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 "Sell." WP Glimcher Dividend Yield: 7.40% WP Glimcher (NYSE: WPG) shares currently have a dividend yield of 7.40%. Washington Prime Group Inc. (NYSE:WPG.WI) operates independently of Simon Property Group Inc. as of May 28, 2014. The company has a P/E ratio of 16.67. The average volume for WP Glimcher has been 1,771,100 shares per day over the past 30 days. WP Glimcher has a market cap of $2.5 billion and is part of the real estate industry. Shares are down 21.6% 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 WP Glimcher as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, unimpressive growth in net income, poor profit margins and weak operating cash flow. Highlights from the ratings report include:
- WP GLIMCHER INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. For the next year, the market is expecting a contraction of 89.1% in earnings ($0.12 versus $1.10).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 121.2% when compared to the same quarter one year ago, falling from $34.39 million to -$7.29 million.
- The gross profit margin for WP GLIMCHER INC is rather low; currently it is at 20.50%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -3.06% is significantly below that of the industry average.
- Net operating cash flow has decreased to $51.77 million or 23.08% 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.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 30.43%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 131.81% compared to the year-earlier quarter.
- You can view the full WP Glimcher Ratings Report.