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 "Sell."Wheeler Real Estate Investment Dividend Yield: 10.80% Wheeler Real Estate Investment (NASDAQ: WHLR) shares currently have a dividend yield of 10.80%. Wheeler Real Estate Investment Trust, Inc. engages in acquiring, financing, developing, leasing, owning, and managing real estate properties in the mid-Atlantic, southeast, and southwest United States. The average volume for Wheeler Real Estate Investment has been 81,000 shares per day over the past 30 days. Wheeler Real Estate Investment has a market cap of $128.5 million and is part of the real estate industry. Shares are down 50.6% 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 Wheeler Real Estate Investment as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and weak operating cash flow. Highlights from the ratings report include:
- WHEELER REAL ESTATE INVT TR 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, WHEELER REAL ESTATE INVT TR reported poor results of -$1.80 versus -$0.94 in the prior year. For the next year, the market is expecting a contraction of 182.8% in earnings (-$5.09 versus -$1.80).
- 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 166.2% when compared to the same quarter one year ago, falling from -$1.82 million to -$4.86 million.
- 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 Real Estate Investment Trusts (REITs) industry and the overall market, WHEELER REAL ESTATE INVT TR's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for WHEELER REAL ESTATE INVT TR is currently extremely low, coming in at 7.40%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -72.41% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$7.45 million or 342.19% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full Wheeler Real Estate Investment Ratings Report.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 68.69%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 950.00% compared to the year-earlier 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, CEQP is still more expensive than most of the other companies in its industry.
- 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 809.1% when compared to the same quarter one year ago, falling from -$4.40 million to -$40.00 million.
- 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 Oil, Gas & Consumable Fuels industry and the overall market, CRESTWOOD EQUITY PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for CRESTWOOD EQUITY PARTNERS LP is currently lower than what is desirable, coming in at 28.37%. Regardless of CEQP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CEQP's net profit margin of -6.23% significantly underperformed when compared to the industry average.
- The debt-to-equity ratio is very high at 3.64 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, CEQP's quick ratio is somewhat strong at 1.02, demonstrating the ability to handle short-term liquidity needs.
- You can view the full Crestwood Equity Partners Ratings Report.
- The gross profit margin for FULL CIRCLE CAPITAL CORP is currently lower than what is desirable, coming in at 33.67%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -34.61% is significantly below that of the industry average.
- FULL'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 46.80%, 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. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Capital Markets industry and the overall market, FULL CIRCLE CAPITAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly increased by 71.08% to -$6.95 million when compared to the same quarter last year. Despite an increase in cash flow, FULL CIRCLE CAPITAL CORP's average is still marginally south of the industry average growth rate of 79.46%.
- FULL CIRCLE CAPITAL CORP 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, FULL CIRCLE CAPITAL CORP continued to lose money by earning -$0.41 versus -$0.83 in the prior year. This year, the market expects an improvement in earnings ($0.45 versus -$0.41).
- You can view the full Full Circle Capital Ratings Report.
- Our dividend calendar.