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."Sunoco Logistics Partners Dividend Yield: 6.70% Sunoco Logistics Partners (NYSE: SXL) shares currently have a dividend yield of 6.70%. Sunoco Logistics Partners L.P. transports, terminals, and stores crude oil, refined products, and natural gas liquids (NGLs). It operates through four segments: Crude Oil Pipelines, Crude Oil Acquisition and Marketing, Terminal Facilities, and Products Pipelines. The average volume for Sunoco Logistics Partners has been 1,185,600 shares per day over the past 30 days. Sunoco Logistics Partners has a market cap of $7.1 billion and is part of the energy industry. Shares are down 32.5% 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 Sunoco Logistics Partners as a hold. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including disappointing return on equity, a generally disappointing performance in the stock itself and poor profit margins. Highlights from the ratings report include:
- Along with the very weak revenue results, SXL underperformed when compared to the industry average of 36.8%. Since the same quarter one year prior, revenues plummeted by 51.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- SXL's debt-to-equity ratio of 0.64 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.
- The change in net income from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 63.9% when compared to the same quarter one year ago, falling from $155.00 million to $56.00 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 44.15%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 114.00% 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's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SUNOCO LOGISTICS PARTNERS LP's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Sunoco Logistics Partners Ratings Report.
- CM's revenue growth has slightly outpaced the industry average of 1.2%. Since the same quarter one year prior, revenues slightly increased by 2.0%. 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 greatly exceeded that of the S&P 500, but is less than that of the Commercial Banks industry average. The net income increased by 6.0% when compared to the same quarter one year prior, going from $918.00 million to $973.00 million.
- The gross profit margin for CANADIAN IMPERIAL BANK is currently very high, coming in at 78.89%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 22.40% trails the industry average.
- 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 Commercial Banks industry and the overall market, CANADIAN IMPERIAL BANK's return on equity exceeds that of both the industry average and the S&P 500.
- CM has underperformed the S&P 500 Index, declining 19.19% 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 Canadian Imperial Bank of Commerce Ratings Report.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 632.9% when compared to the same quarter one year prior, rising from $7.90 million to $57.90 million.
- CVI's debt-to-equity ratio of 0.63 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. Despite the fact that CVI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.03 is high and demonstrates strong liquidity.
- The gross profit margin for CVR ENERGY INC is currently extremely low, coming in at 13.22%. Regardless of CVI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CVI's net profit margin of 4.10% compares favorably to the industry average.
- CVI has underperformed the S&P 500 Index, declining 12.96% 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 CVR Energy Ratings Report.
- Our dividend calendar.