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." Washington REIT Dividend Yield: 4.50% Washington REIT (NYSE: WRE) shares currently have a dividend yield of 4.50%. Washington Real Estate Investment Trust is an equity real estate investment trust (REIT). The company engages in the ownership, operation, and development of real properties. The firm invests in real estate markets of the greater Washington D.C. metro region. The company has a P/E ratio of 48.02. The average volume for Washington REIT has been 369,400 shares per day over the past 30 days. Washington REIT has a market cap of $1.8 billion and is part of the real estate industry. Shares are down 4.7% year-to-date as of the close of trading on Monday. 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 Washington REIT as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and relatively poor performance when compared with the S&P 500 during the past year. Highlights from the ratings report include:
- WRE's revenue growth has slightly outpaced the industry average of 8.4%. Since the same quarter one year prior, revenues slightly increased by 9.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- WASHINGTON REIT reported significant earnings per share improvement 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, WASHINGTON REIT increased its bottom line by earning $0.06 versus $0.00 in the prior year. This year, the market expects an improvement in earnings ($0.57 versus $0.06).
- The gross profit margin for WASHINGTON REIT is rather low; currently it is at 19.28%. Regardless of WRE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, WRE's net profit margin of 39.31% significantly outperformed against the industry.
- In its most recent trading session, WRE has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- 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 71.7% when compared to the same quarter one year ago, falling from $104.27 million to $29.51 million.
- You can view the full Washington REIT Ratings Report.
- The revenue growth greatly exceeded the industry average of 17.3%. Since the same quarter one year prior, revenues rose by 44.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, HI-CRUSH PARTNERS LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- HI-CRUSH PARTNERS LP has improved earnings per share by 22.4% 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, HI-CRUSH PARTNERS LP increased its bottom line by earning $2.92 versus $2.08 in the prior year. For the next year, the market is expecting a contraction of 27.1% in earnings ($2.13 versus $2.92).
- The debt-to-equity ratio of 1.22 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, HCLP has managed to keep a strong quick ratio of 1.89, which demonstrates the ability to cover short-term cash needs.
- The gross profit margin for HI-CRUSH PARTNERS LP is currently lower than what is desirable, coming in at 34.73%. It has decreased from the same quarter the previous year. Despite the weak results of the gross profit margin, the net profit margin of 23.19% has significantly outperformed against the industry average.
- You can view the full Hi-Crush Partners Ratings Report.
- CONE's revenue growth has slightly outpaced the industry average of 8.4%. Since the same quarter one year prior, revenues rose by 10.6%. 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.
- This stock has managed to rise its share value by 30.20% over the past twelve months. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- CYRUSONE INC's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. 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, CYRUSONE INC continued to lose money by earning -$0.25 versus -$1.32 in the prior year. This year, the market expects an improvement in earnings ($0.09 versus -$0.25).
- The gross profit margin for CYRUSONE INC is currently extremely low, coming in at 5.25%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -5.01% is significantly below that of the industry average.
- Net operating cash flow has decreased to $33.30 million or 12.13% 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 CyrusOne Ratings Report.
- Our dividend calendar.