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."Rayonier Dividend Yield: 4.10% Rayonier (NYSE: RYN) shares currently have a dividend yield of 4.10%. Rayonier Inc. operates as an investment arm of Rayonier TRS Operating Company. Rayonier, Inc. engages in the sale and development of real estate and timberland management, as well as in the production and sale of cellulose fibers in the United States, New Zealand, and Australia. The company has a P/E ratio of 50.27. The average volume for Rayonier has been 1,182,400 shares per day over the past 30 days. Rayonier has a market cap of $3.1 billion and is part of the materials & construction industry. Shares are down 11.9% year-to-date as of the close of trading on Friday. 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 Rayonier as a hold. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity. Highlights from the ratings report include:
- 44.95% is the gross profit margin for RAYONIER 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, RYN's net profit margin of 12.64% significantly trails the industry average.
- RYN, with its decline in revenue, slightly underperformed the industry average of 6.6%. Since the same quarter one year prior, revenues slightly dropped by 2.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- RAYONIER INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, RAYONIER INC reported lower earnings of $0.43 versus $0.80 in the prior year. For the next year, the market is expecting a contraction of 13.9% in earnings ($0.37 versus $0.43).
- 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 57.1% when compared to the same quarter one year ago, falling from $41.43 million to $17.75 million.
- 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, RAYONIER INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Rayonier Ratings Report.
- The current debt-to-equity ratio, 0.39, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, STM has a quick ratio of 1.55, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has significantly increased by 218.57% to $223.00 million when compared to the same quarter last year. In addition, STMICROELECTRONICS NV has also vastly surpassed the industry average cash flow growth rate of -49.40%.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 11.4%. Since the same quarter one year prior, revenues slightly dropped by 5.6%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- The change in net income from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Semiconductors & Semiconductor Equipment industry average. The net income has decreased by 10.5% when compared to the same quarter one year ago, dropping from $38.00 million to $34.00 million.
- STM has underperformed the S&P 500 Index, declining 8.60% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- You can view the full STMicroelectronics Ratings Report.
- The revenue growth greatly exceeded the industry average of 37.8%. Since the same quarter one year prior, revenues slightly increased by 7.8%. 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.
- Net operating cash flow has significantly increased by 75.12% to $181.67 million when compared to the same quarter last year. In addition, TEEKAY CORP has also vastly surpassed the industry average cash flow growth rate of -48.80%.
- TEEKAY CORP 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. 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, TEEKAY CORP continued to lose money by earning -$0.77 versus -$1.62 in the prior year. This year, the market expects an improvement in earnings ($1.67 versus -$0.77).
- 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 1900.8% when compared to the same quarter one year ago, falling from -$0.49 million to -$9.76 million.
- The debt-to-equity ratio is very high at 6.73 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, TK maintains a poor quick ratio of 0.74, which illustrates the inability to avoid short-term cash problems.
- You can view the full Teekay Ratings Report.
- Our dividend calendar.