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."Valley National Bancorp Dividend Yield: 4.30% Valley National Bancorp (NYSE: VLY) shares currently have a dividend yield of 4.30%. Valley National Bancorp operates as the holding company for the Valley National Bank that provides commercial, retail, insurance, and wealth management financial services products. The company operates through Commercial Lending, Consumer Lending, and Investment Management segments. The company has a P/E ratio of 19.84. The average volume for Valley National Bancorp has been 1,633,900 shares per day over the past 30 days. Valley National Bancorp has a market cap of $2.4 billion and is part of the banking industry. Shares are up 3% 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 Valley National Bancorp as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, expanding profit margins, reasonable valuation levels and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 1.2%. Since the same quarter one year prior, revenues rose by 15.5%. 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.
- 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 Commercial Banks industry average. The net income increased by 8.4% when compared to the same quarter one year prior, going from $29.52 million to $31.99 million.
- The gross profit margin for VALLEY NATIONAL BANCORP is currently very high, coming in at 77.51%. Regardless of VLY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 16.32% trails the industry average.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full Valley National Bancorp Ratings Report.
- LTC's revenue growth has slightly outpaced the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 10.8%. 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.
- The gross profit margin for LTC PROPERTIES INC is currently very high, coming in at 78.46%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 55.35% significantly outperformed against the industry average.
- LTC PROPERTIES INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, LTC PROPERTIES INC increased its bottom line by earning $1.99 versus $1.56 in the prior year. This year, the market expects an improvement in earnings ($2.02 versus $1.99).
- Net operating cash flow has slightly increased to $26.10 million or 2.70% when compared to the same quarter last year. Despite an increase in cash flow, LTC PROPERTIES INC's cash flow growth rate is still lower than the industry average growth rate of 16.13%.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full LTC Properties Ratings Report.
- Net operating cash flow has increased to $148.68 million or 18.99% when compared to the same quarter last year. In addition, W P CAREY INC has also modestly surpassed the industry average cash flow growth rate of 16.13%.
- The gross profit margin for W P CAREY INC is currently very high, coming in at 88.36%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 26.60% trails the industry average.
- W P CAREY 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, W P CAREY INC increased its bottom line by earning $2.15 versus $1.21 in the prior year. For the next year, the market is expecting a contraction of 8.8% in earnings ($1.96 versus $2.15).
- WPC, with its decline in revenue, underperformed when compared the industry average of 9.8%. Since the same quarter one year prior, revenues slightly dropped by 6.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full W P Carey Ratings Report.
- Our dividend calendar.