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." Harte-Hanks Dividend Yield: 7.10% Harte-Hanks (NYSE: HHS) shares currently have a dividend yield of 7.10%. Harte-Hanks, Inc. provides various marketing services in the United States and internationally. The company operates in two segments, Customer Interaction and Trillium Software. The company has a P/E ratio of 21.77. The average volume for Harte-Hanks has been 268,300 shares per day over the past 30 days. Harte-Hanks has a market cap of $295.4 million and is part of the media industry. Shares are down 36.6% 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 Harte-Hanks as a hold. The company's strongest point has been its expanding profit margins. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and unimpressive growth in net income. Highlights from the ratings report include:
- HHS, with its decline in revenue, underperformed when compared the industry average of 6.6%. Since the same quarter one year prior, revenues fell by 12.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for HARTE HANKS INC is rather low; currently it is at 20.03%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -3.41% is significantly below that of the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 31.58%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 177.77% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, HHS is still more expensive than most of the other companies in its industry.
- HARTE HANKS INC 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. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, HARTE HANKS INC reported lower earnings of $0.38 versus $0.39 in the prior year. For the next year, the market is expecting a contraction of 18.4% in earnings ($0.31 versus $0.38).
- 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 Media industry. The net income has significantly decreased by 174.0% when compared to the same quarter one year ago, falling from $5.64 million to -$4.17 million.
- You can view the full Harte-Hanks Ratings Report.
- UNITED DEV FUNDING IV has improved earnings per share by 34.3% in the most recent quarter compared to the same quarter a year ago.
- 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 25.6% when compared to the same quarter one year prior, rising from $11.39 million to $14.30 million.
- The gross profit margin for UNITED DEV FUNDING IV is currently very high, coming in at 74.94%. Regardless of UDF's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, UDF's net profit margin of 63.17% significantly outperformed against the industry.
- In its most recent trading session, UDF has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors.
- When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, UNITED DEV FUNDING IV's return on equity is below that of both the industry average and the S&P 500.
- You can view the full United Development Funding IV Ratings Report.
- The revenue growth came in higher than the industry average of 5.3%. Since the same quarter one year prior, revenues slightly increased by 7.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- NTL's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.72 is somewhat weak and could be cause for future problems.
- 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. In comparison to the other companies in the Diversified Telecommunication Services industry and the overall market, NORTEL INVERSORA SA's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Net operating cash flow has decreased to $131.98 million or 16.27% 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 Nortel Inversora Ratings Report.
- Our dividend calendar.