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 "Buy."Suburban Propane Partners Dividend Yield: 9.50% Suburban Propane Partners (NYSE: SPH) shares currently have a dividend yield of 9.50%. Suburban Propane Partners, L.P., through its subsidiaries, engages in the retail marketing and distribution of propane, fuel oil, and refined fuels. The company has a P/E ratio of 23.50. The average volume for Suburban Propane Partners has been 180,600 shares per day over the past 30 days. Suburban Propane Partners has a market cap of $2.3 billion and is part of the utilities industry. Shares are down 13.7% 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 Suburban Propane Partners as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, notable return on equity and reasonable valuation levels. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- SUBURBAN PROPANE PRTNRS -LP has improved earnings per share by 31.6% 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. During the past fiscal year, SUBURBAN PROPANE PRTNRS -LP increased its bottom line by earning $1.55 versus $1.44 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus $1.55).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Gas Utilities industry. The net income increased by 30.6% when compared to the same quarter one year prior, rising from -$58.99 million to -$40.95 million.
- 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 Gas Utilities industry and the overall market on the basis of return on equity, SUBURBAN PROPANE PRTNRS -LP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- SPH, with its decline in revenue, slightly underperformed the industry average of 19.2%. Since the same quarter one year prior, revenues fell by 25.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full Suburban Propane Partners Ratings Report.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 12.4% when compared to the same quarter one year prior, going from $10.84 million to $12.19 million.
- Net operating cash flow has increased to $19.15 million or 22.42% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -20.65%.
- The gross profit margin for TRANSMONTAIGNE PARTNERS LP is rather high; currently it is at 55.69%. Regardless of TLP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TLP's net profit margin of 32.91% significantly outperformed against the industry.
- The debt-to-equity ratio is somewhat low, currently at 0.66, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.99 is somewhat weak and could be cause for future problems.
- TRANSMONTAIGNE PARTNERS LP has improved earnings per share by 14.3% in the most recent quarter compared to 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, TRANSMONTAIGNE PARTNERS LP reported lower earnings of $1.57 versus $1.90 in the prior year. This year, the market expects an improvement in earnings ($2.10 versus $1.57).
- You can view the full TransMontaigne Partners Ratings Report.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry average. The net income increased by 5.0% when compared to the same quarter one year prior, going from $114.31 million to $120.07 million.
- The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.21, which illustrates the ability to avoid short-term cash problems.
- 42.45% is the gross profit margin for SILICONWARE PRECISION INDS which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 17.26% trails the industry average.
- 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 Semiconductors & Semiconductor Equipment industry and the overall market on the basis of return on equity, SILICONWARE PRECISION INDS has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full Siliconware Precision Industries Ratings Report.
- Our dividend calendar.