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."Spirit Realty Capital Dividend Yield: 7.00% Spirit Realty Capital (NYSE: SRC) shares currently have a dividend yield of 7.00%. Spirit Realty Capital, Inc is a publicly traded real estate investment trust. The average volume for Spirit Realty Capital has been 5,915,500 shares per day over the past 30 days. Spirit Realty Capital has a market cap of $4.3 billion and is part of the real estate industry. Shares are down 18.7% 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 Spirit Realty Capital as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- SRC's revenue growth has slightly outpaced the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 12.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- SPIRIT REALTY CAPITAL INC 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, SPIRIT REALTY CAPITAL INC continued to lose money by earning -$0.10 versus -$0.11 in the prior year. This year, the market expects an improvement in earnings ($0.21 versus -$0.10).
- 45.15% is the gross profit margin for SPIRIT REALTY CAPITAL INC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, SRC's net profit margin of 15.60% significantly trails the industry average.
- SRC has underperformed the S&P 500 Index, declining 11.98% 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.
- 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 Real Estate Investment Trusts (REITs) industry and the overall market, SPIRIT REALTY CAPITAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Spirit Realty Capital Ratings Report.
- KRG's very impressive revenue growth greatly exceeded the industry average of 8.5%. Since the same quarter one year prior, revenues leaped by 103.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- This stock has managed to rise its share value by 5.72% over the past twelve months. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, KITE REALTY GROUP TRUST's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for KITE REALTY GROUP TRUST is rather low; currently it is at 21.47%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 8.26% significantly trails the industry average.
- You can view the full Kite Realty Group Ratings Report.
- The revenue growth came in higher than the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 36.8%. 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 net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 17.0% when compared to the same quarter one year prior, going from $9.36 million to $10.96 million.
- Compared to its closing price of one year ago, SUI's share price has jumped by 25.45%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- The gross profit margin for SUN COMMUNITIES INC is rather low; currently it is at 19.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 7.17% significantly trails the industry average.
- Net operating cash flow has declined marginally to $40.94 million or 8.34% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, SUN COMMUNITIES INC has marginally lower results.
- You can view the full Sun Communities Ratings Report.
- Our dividend calendar.