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."Triangle Capital Corporation Dividend Yield: 12.40% Triangle Capital Corporation (NYSE: TCAP) shares currently have a dividend yield of 12.40%. Triangle Capital Corporation is a business development company specializing in private equity and mezzanine investments. The company has a P/E ratio of 8.69. The average volume for Triangle Capital Corporation has been 161,600 shares per day over the past 30 days. Triangle Capital Corporation has a market cap of $581.3 million and is part of the financial services industry. Shares are down 15.5% 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 Triangle Capital Corporation as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 5.1%. Since the same quarter one year prior, revenues rose by 11.6%. 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 TRIANGLE CAPITAL CORP is currently very high, coming in at 84.48%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 43.75% significantly outperformed against the industry average.
- 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 Capital Markets industry and the overall market on the basis of return on equity, TRIANGLE CAPITAL CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 30.80%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 57.47% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- You can view the full Triangle Capital Corporation Ratings Report.
- 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 Marine industry and the overall market, COSTAMARE INC's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for COSTAMARE INC is currently very high, coming in at 72.84%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 28.07% significantly outperformed against the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.5%. Since the same quarter one year prior, revenues slightly dropped by 0.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Net operating cash flow has significantly decreased to -$60.92 million or 192.63% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Currently the debt-to-equity ratio of 1.72 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, CMRE has a quick ratio of 0.55, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full Costamare Ratings Report.
- The revenue growth greatly exceeded the industry average of 5.1%. Since the same quarter one year prior, revenues rose by 32.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for HARVEST CAPITAL CREDIT CORP is rather high; currently it is at 61.29%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 68.35% significantly outperformed against 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 Capital Markets industry and the overall market on the basis of return on equity, HARVEST CAPITAL CREDIT CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- HARVEST CAPITAL CREDIT CORP has improved earnings per share by 30.8% 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, HARVEST CAPITAL CREDIT CORP increased its bottom line by earning $1.52 versus $0.47 in the prior year. For the next year, the market is expecting a contraction of 13.2% in earnings ($1.32 versus $1.52).
- HCAP has underperformed the S&P 500 Index, declining 5.79% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- You can view the full Harvest Capital Credit Ratings Report.
- Our dividend calendar.