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."Corporate Office Properties Dividend Yield: 4.80% Corporate Office Properties (NYSE: OFC) shares currently have a dividend yield of 4.80%. Corporate Office Properties Trust, a real estate investment trust (REIT), engages in the acquisition, development, ownership, management, and leasing of suburban office properties. The company has a P/E ratio of 49.59. The average volume for Corporate Office Properties has been 961,200 shares per day over the past 30 days. Corporate Office Properties has a market cap of $2.2 billion and is part of the real estate industry. Shares are down 23.9% year-to-date as of the close of trading on Monday. 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 Corporate Office Properties as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 9.7%. Since the same quarter one year prior, revenues rose by 21.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CORP OFFICE PPTYS TR INC 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CORP OFFICE PPTYS TR INC increased its bottom line by earning $0.25 versus $0.22 in the prior year. This year, the market expects an improvement in earnings ($0.60 versus $0.25).
- The gross profit margin for CORP OFFICE PPTYS TR INC is rather low; currently it is at 22.56%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 9.19% significantly trails the industry average.
- OFC has underperformed the S&P 500 Index, declining 16.53% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full Corporate Office Properties Ratings Report.
- RGC's revenue growth has slightly outpaced the industry average of 6.6%. Since the same quarter one year prior, revenues rose by 12.0%. Growth in the company's revenue appears to have helped boost 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 Media industry. The net income increased by 58.0% when compared to the same quarter one year prior, rising from $33.80 million to $53.40 million.
- REGAL ENTERTAINMENT GROUP 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, REGAL ENTERTAINMENT GROUP reported lower earnings of $0.68 versus $1.00 in the prior year. This year, the market expects an improvement in earnings ($1.15 versus $0.68).
- The gross profit margin for REGAL ENTERTAINMENT GROUP is rather low; currently it is at 22.30%. Regardless of RGC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.18% trails the industry average.
- RGC has underperformed the S&P 500 Index, declining 10.05% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- You can view the full Regal Entertainment Group Ratings Report.
- The revenue growth greatly exceeded the industry average of 10.0%. Since the same quarter one year prior, revenues rose by 30.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- PATTERN ENERGY GROUP INC has improved earnings per share by 5.0% 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, PATTERN ENERGY GROUP INC reported poor results of -$0.55 versus -$0.24 in the prior year. This year, the market expects an improvement in earnings (-$0.06 versus -$0.55).
- The gross profit margin for PATTERN ENERGY GROUP INC is rather high; currently it is at 66.95%. Regardless of PEGI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PEGI's net profit margin of 16.90% compares favorably to the industry average.
- The debt-to-equity ratio is very high at 2.42 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.22, which clearly demonstrates the inability to cover short-term cash needs.
- 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. Compared to other companies in the Independent Power Producers & Energy Traders industry and the overall market, PATTERN ENERGY GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Pattern Energy Group Ratings Report.
- Our dividend calendar.