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."Collectors Universe Dividend Yield: 8.20% Collectors Universe (NASDAQ: CLCT) shares currently have a dividend yield of 8.20%. Collectors Universe Inc. provides third-party authentication, grading, and related services for rare and high-value collectibles consisting of coins, trading cards, sports memorabilia, and autographs. The company has a P/E ratio of 19.20. The average volume for Collectors Universe has been 27,900 shares per day over the past 30 days. Collectors Universe has a market cap of $151.8 million and is part of the diversified services industry. Shares are down 17.8% year-to-date as of the close of trading on Thursday. 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 Collectors Universe as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- CLCT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, CLCT has a quick ratio of 1.56, which demonstrates the ability of the company to cover short-term liquidity needs.
- 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 Diversified Consumer Services industry and the overall market, COLLECTORS UNIVERSE INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for COLLECTORS UNIVERSE INC is rather high; currently it is at 60.99%. Regardless of CLCT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CLCT's net profit margin of 11.53% compares favorably to the industry average.
- CLCT, with its decline in revenue, underperformed when compared the industry average of 12.5%. Since the same quarter one year prior, revenues slightly dropped by 7.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The change in net income from the same quarter one year ago has significantly exceeded that of the Diversified Consumer Services industry average, but is less than that of the S&P 500. The net income has significantly decreased by 25.8% when compared to the same quarter one year ago, falling from $2.39 million to $1.77 million.
- You can view the full Collectors Universe Ratings Report.
- The revenue growth greatly exceeded the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 44.8%. 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.
- Compared to its closing price of one year ago, LOAN's share price has jumped by 47.84%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, LOAN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The gross profit margin for MANHATTAN BRIDGE CAPITAL INC is currently very high, coming in at 76.43%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 58.11% significantly outperformed against the industry average.
- Net operating cash flow has increased to $0.48 million or 21.66% when compared to the same quarter last year. In addition, MANHATTAN BRIDGE CAPITAL INC has also modestly surpassed the industry average cash flow growth rate of 15.56%.
- You can view the full Manhattan Bridge Capital Ratings Report.
- The revenue growth came in higher than the industry average of 4.7%. Since the same quarter one year prior, revenues rose by 18.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for MAIN STREET CAPITAL CORP is currently very high, coming in at 84.39%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 98.77% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 94.45% to -$6.63 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 79.46%.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 36.2% when compared to the same quarter one year prior, rising from $29.95 million to $40.80 million.
- MAIN STREET CAPITAL CORP has improved earnings per share by 20.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MAIN STREET CAPITAL CORP reported lower earnings of $2.33 versus $2.66 in the prior year. For the next year, the market is expecting a contraction of 6.7% in earnings ($2.18 versus $2.33).
- You can view the full Main Street Capital Corporation Ratings Report.
- Our dividend calendar.