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."CrossAmerica Partners Dividend Yield: 9.70% CrossAmerica Partners (NYSE: CAPL) shares currently have a dividend yield of 9.70%. CrossAmerica Partners LP operates as a wholesale distributor of motor fuels, and owns and leases real estate used in the retail distribution of motor fuels in the United States. The average volume for CrossAmerica Partners has been 256,300 shares per day over the past 30 days. CrossAmerica Partners has a market cap of $591.8 million and is part of the energy industry. Shares are down 42.8% 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 CrossAmerica Partners as a hold. Among the primary strengths of the company is its generally strong cash flow from operations. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk. Highlights from the ratings report include:
- Net operating cash flow has significantly increased by 227.14% to $5.56 million when compared to the same quarter last year. In addition, CROSSAMERICA PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -20.29%.
- Despite the weak revenue results, CAPL has outperformed against the industry average of 34.4%. Since the same quarter one year prior, revenues fell by 16.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- CROSSAMERICA PARTNERS LP 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CROSSAMERICA PARTNERS LP swung to a loss, reporting -$0.22 versus $1.19 in the prior year. This year, the market expects an improvement in earnings ($0.19 versus -$0.22).
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CROSSAMERICA PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
- 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 98.4% when compared to the same quarter one year ago, falling from $1.89 million to $0.03 million.
- You can view the full CrossAmerica Partners Ratings Report.
- GZT's revenue growth has slightly outpaced the industry average of 11.0%. Since the same quarter one year prior, revenues rose by 12.1%. 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 $86.69 million or 8.30% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -22.07%.
- The gross profit margin for GAZIT GLOBE is rather high; currently it is at 56.27%. 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 7.64% trails the industry average.
- GAZIT GLOBE's earnings per share declined by 16.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, GAZIT GLOBE reported lower earnings of $0.10 versus $1.51 in the prior year.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Real Estate Management & Development industry average, but is greater than that of the S&P 500. The net income has decreased by 12.1% when compared to the same quarter one year ago, dropping from $43.62 million to $38.34 million.
- You can view the full Gazit-Globe Ratings Report.
- The revenue growth greatly exceeded the industry average of 9.9%. Since the same quarter one year prior, revenues rose by 36.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- WILN's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, WILN has a quick ratio of 2.20, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has decreased to $7.19 million or 38.91% 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.
- WILN's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 49.75%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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, WILN is still more expensive than most of the other companies in its industry.
- You can view the full Wi-Lan Ratings Report.
- Our dividend calendar.