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."TICC Capital Dividend Yield: 17.80% TICC Capital (NASDAQ: TICC) shares currently have a dividend yield of 17.80%. TICC Capital Corp., a business development company, operates as a closed-end, non-diversified management investment company. The firm invests in both public and private companies. The company has a P/E ratio of 9.73. The average volume for TICC Capital has been 304,200 shares per day over the past 30 days. TICC Capital has a market cap of $391.1 million and is part of the financial services industry. Shares are down 14.6% year-to-date as of the close of trading on Wednesday. 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 TICC Capital as a hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, deteriorating net income and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- Net operating cash flow has significantly increased by 218.27% to $42.55 million when compared to the same quarter last year. In addition, TICC CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of 79.46%.
- The gross profit margin for TICC CAPITAL CORP is rather high; currently it is at 66.82%. Regardless of TICC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TICC's net profit margin of 42.20% significantly outperformed against the industry.
- Compared to its price level of one year ago, TICC is down 26.88% to its most recent closing price of 6.34. Looking ahead, our view is that this company's fundamentals will not have much impact either way, allowing the stock to generally move up or down based on the push and pull of the broad market.
- The change in net income from the same quarter one year ago has exceeded that of the Capital Markets industry average, but is less than that of the S&P 500. The net income has decreased by 23.6% when compared to the same quarter one year ago, dropping from $13.14 million to $10.04 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 Capital Markets industry and the overall market on the basis of return on equity, TICC CAPITAL CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full TICC Capital Ratings Report.
- The revenue growth greatly exceeded the industry average of 20.3%. Since the same quarter one year prior, revenues rose by 22.4%. 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 Marine industry. The net income increased by 259.2% when compared to the same quarter one year prior, rising from -$2.29 million to $3.64 million.
- GLOBAL SHIP LEASE INC 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, GLOBAL SHIP LEASE INC reported lower earnings of $0.10 versus $0.68 in the prior year. This year, the market expects an improvement in earnings ($0.22 versus $0.10).
- The debt-to-equity ratio of 1.03 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, GSL has managed to keep a strong quick ratio of 2.41, which demonstrates the ability 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 Marine industry and the overall market on the basis of return on equity, GLOBAL SHIP LEASE INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full Global Ship Lease Ratings Report.
- The revenue growth greatly exceeded the industry average of 33.1%. Since the same quarter one year prior, revenues rose by 10.3%. 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.
- BBEP's debt-to-equity ratio of 0.85 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.79 is weak.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 86.99%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 64.04% compared to the year-earlier 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.
- 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 191.9% when compared to the same quarter one year ago, falling from -$104.73 million to -$305.71 million.
- You can view the full BreitBurn Energy Partners Ratings Report.
- Our dividend calendar.