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."World Point Terminals Dividend Yield: 7.10% World Point Terminals (NYSE: WPT) shares currently have a dividend yield of 7.10%. World Point Terminals, LP owns, operates, develops, and acquires terminals and other assets for the storage of light refined products, heavy refined products, and crude oil in the East Coast, Gulf Coast, and Midwest regions of the United States. The company has a P/E ratio of 17.35. The average volume for World Point Terminals has been 39,800 shares per day over the past 30 days. World Point Terminals has a market cap of $312.4 million and is part of the energy industry. Shares are down 15.5% 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 World Point Terminals as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and weak operating cash flow. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 38.7%. 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, displaying stagnant earnings per share.
- WPT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.85, which clearly demonstrates the ability to cover short-term cash needs.
- WORLD POINT TERMINALS reported flat earnings per share in the most recent quarter. 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, WORLD POINT TERMINALS increased its bottom line by earning $0.98 versus $0.76 in the prior year. This year, the market expects an improvement in earnings ($1.09 versus $0.98).
- 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 on the basis of return on equity, WORLD POINT TERMINALS has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- Net operating cash flow has decreased to $12.87 million or 10.95% when compared to the same quarter last year. Despite a decrease in cash flow WORLD POINT TERMINALS is still fairing well by exceeding its industry average cash flow growth rate of -53.29%.
- You can view the full World Point Terminals Ratings Report.
- The gross profit margin for CAPSTEAD MORTGAGE CORP is currently very high, coming in at 94.05%. Regardless of CMO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CMO's net profit margin of 57.75% significantly outperformed against the industry.
- CMO, with its decline in revenue, slightly underperformed the industry average of 8.4%. Since the same quarter one year prior, revenues slightly dropped by 1.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Net operating cash flow has declined marginally to $58.85 million or 4.15% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, CAPSTEAD MORTGAGE CORP has marginally lower results.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Real Estate Investment Trusts (REITs) industry average, but is greater than that of the S&P 500. The net income has decreased by 11.5% when compared to the same quarter one year ago, dropping from $38.39 million to $33.96 million.
- You can view the full Capstead Mortgage Ratings Report.
- Net operating cash flow has slightly increased to $181.36 million or 4.20% when compared to the same quarter last year. Despite an increase in cash flow, FERRELLGAS PARTNERS -LP's cash flow growth rate is still lower than the industry average growth rate of 24.88%.
- FGP, with its decline in revenue, slightly underperformed the industry average of 20.2%. Since the same quarter one year prior, revenues fell by 26.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- FERRELLGAS PARTNERS -LP's earnings per share declined by 24.6% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, FERRELLGAS PARTNERS -LP reported lower earnings of $0.40 versus $0.68 in the prior year. This year, the market expects an improvement in earnings ($0.68 versus $0.40).
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Gas Utilities industry average. The net income has decreased by 21.1% when compared to the same quarter one year ago, dropping from $45.39 million to $35.81 million.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, FGP has underperformed the S&P 500 Index, declining 17.59% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full Ferrellgas Partners Ratings Report.
- Our dividend calendar.