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."BGC Partners Dividend Yield: 6.20% BGC Partners (NASDAQ: BGCP) shares currently have a dividend yield of 6.20%. BGC Partners, Inc. operates as a brokerage company in the United Kingdom, the United States, and internationally. It operates in two segments, Financial Services and Real Estate Services. The company has a P/E ratio of 226.50. The average volume for BGC Partners has been 1,264,300 shares per day over the past 30 days. BGC Partners has a market cap of $1.9 billion and is part of the financial services industry. Shares are down 2% 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 BGC Partners as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and weak operating cash flow. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 3.8%. Since the same quarter one year prior, revenues rose by 23.1%. 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 significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 75.5% when compared to the same quarter one year prior, rising from $8.01 million to $14.06 million.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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 gross profit margin for BGC PARTNERS INC is currently extremely low, coming in at 6.61%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.56% significantly trails the industry average.
- Net operating cash flow has significantly decreased to -$52.35 million or 81903.12% 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 BGC Partners Ratings Report.
- CONE's revenue growth has slightly outpaced the industry average of 8.6%. 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 18.16% 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.
- 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 ($0.16 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.
- CM's revenue growth has slightly outpaced the industry average of 2.8%. Since the same quarter one year prior, revenues slightly increased by 3.4%. Growth in the company's revenue appears to have helped boost the 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. Compared to other companies in the Commercial Banks industry and the overall market, CANADIAN IMPERIAL BANK's return on equity exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has increased to -$1,903.00 million or 13.53% when compared to the same quarter last year. Despite an increase in cash flow of 13.53%, CANADIAN IMPERIAL BANK is still growing at a significantly lower rate than the industry average of 119.10%.
- CANADIAN IMPERIAL BANK reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, CANADIAN IMPERIAL BANK reported lower earnings of $7.85 versus $8.12 in the prior year.
- CM has underperformed the S&P 500 Index, declining 22.33% 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.
- You can view the full Canadian Imperial Bank of Commerce Ratings Report.
- Our dividend calendar.