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."TAL International Group Dividend Yield: 14.50% TAL International Group (NYSE: TAL) shares currently have a dividend yield of 14.50%. TAL International Group, Inc., together with its subsidiaries, leases intermodal transportation equipment and provides maritime container management services worldwide. The company operates in two segments, Equipment Leasing and Equipment Trading. The company has a P/E ratio of 5.66. The average volume for TAL International Group has been 426,900 shares per day over the past 30 days. TAL International Group has a market cap of $660.5 million and is part of the diversified services industry. Shares are down 55.7% 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 TAL International Group as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 4.7%. Since the same quarter one year prior, revenues slightly increased by 2.3%. 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 slightly increased to $111.89 million or 7.81% when compared to the same quarter last year. Despite an increase in cash flow, TAL INTERNATIONAL GROUP INC's cash flow growth rate is still lower than the industry average growth rate of 40.59%.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Trading Companies & Distributors industry average, but is greater than that of the S&P 500. The net income has decreased by 9.2% when compared to the same quarter one year ago, dropping from $29.36 million to $26.67 million.
- The debt-to-equity ratio is very high at 4.77 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- You can view the full TAL International Group Ratings Report.
- Powered by its strong earnings growth of 691.66% and other important driving factors, this stock has surged by 37.58% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
- ALON USA PARTNERS LP 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, ALON USA PARTNERS LP increased its bottom line by earning $2.70 versus $2.19 in the prior year. This year, the market expects an improvement in earnings ($2.95 versus $2.70).
- Despite the weak revenue results, ALDW has outperformed against the industry average of 34.8%. Since the same quarter one year prior, revenues fell by 13.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for ALON USA PARTNERS LP is currently extremely low, coming in at 14.98%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, ALDW's net profit margin of 9.50% compares favorably to the industry average.
- The debt-to-equity ratio of 1.43 is relatively high when compared with the industry average, suggesting a need for better debt level management.
- You can view the full Alon USA Partners Ratings Report.
- AMERICAN CAPITAL SR FLTG LTD has improved earnings per share by 14.3% in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($1.27 versus $0.37).
- 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 10.8% when compared to the same quarter one year prior, going from $2.85 million to $3.16 million.
- When compared to other companies in the Capital Markets industry and the overall market, AMERICAN CAPITAL SR FLTG LTD's return on equity is below that of both the industry average and the S&P 500.
- ACSF has underperformed the S&P 500 Index, declining 8.01% 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 American Capital Senior Floating Ratings Report.
- Our dividend calendar.