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."MDU Resources Group Dividend Yield: 4.10% MDU Resources Group (NYSE: MDU) shares currently have a dividend yield of 4.10%. MDU Resources Group, Inc. operates as a diversified natural resource company in the United States. The company's Electric segment generates, transmits, and distributes electricity in Montana, North Dakota, South Dakota, and Wyoming. The company has a P/E ratio of 12.92. The average volume for MDU Resources Group has been 1,055,200 shares per day over the past 30 days. MDU Resources Group has a market cap of $3.5 billion and is part of the materials & construction industry. Shares are down 20.6% 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 MDU Resources Group as a buy. The company's strongest point has been its expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share. Highlights from the ratings report include:
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.9%. Since the same quarter one year prior, revenues slightly dropped by 6.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 28.17%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 39.62% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.
- MDU RESOURCES GROUP INC's earnings per share declined by 39.6% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, MDU RESOURCES GROUP INC reported lower earnings of $1.27 versus $1.46 in the prior year. For the next year, the market is expecting a contraction of 26.4% in earnings ($0.94 versus $1.27).
- 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 Multi-Utilities industry. The net income has significantly decreased by 235.1% when compared to the same quarter one year ago, falling from $103.21 million to -$139.40 million.
- The gross profit margin for MDU RESOURCES GROUP INC is currently extremely low, coming in at 13.09%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -10.88% is significantly below that of the industry average.
- You can view the full MDU Resources Group Ratings Report.
- SO's revenue growth has slightly outpaced the industry average of 0.1%. Since the same quarter one year prior, revenues slightly increased by 1.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- SOUTHERN CO has improved earnings per share by 31.3% 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. During the past fiscal year, SOUTHERN CO increased its bottom line by earning $2.18 versus $1.87 in the prior year. This year, the market expects an improvement in earnings ($2.87 versus $2.18).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 31.8% when compared to the same quarter one year prior, rising from $735.00 million to $969.00 million.
- 43.29% is the gross profit margin for SOUTHERN CO which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.94% is above that of the industry average.
- Net operating cash flow has increased to $2,981.00 million or 13.90% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -0.82%.
- You can view the full Southern Ratings Report.
- The revenue growth came in higher than the industry average of 2.3%. Since the same quarter one year prior, revenues rose by 16.2%. 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.
- Net operating cash flow has slightly increased to $158.86 million or 4.53% when compared to the same quarter last year. In addition, AIRCASTLE LTD has also modestly surpassed the industry average cash flow growth rate of 1.48%.
- The gross profit margin for AIRCASTLE LTD is currently very high, coming in at 91.87%. 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 -6.87% is in-line with the industry average.
- AIRCASTLE LTD 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. 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, AIRCASTLE LTD increased its bottom line by earning $1.25 versus $0.47 in the prior year. This year, the market expects an improvement in earnings ($1.57 versus $1.25).
- 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. In comparison to the other companies in the Trading Companies & Distributors industry and the overall market, AIRCASTLE LTD's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full Aircastle Ratings Report.
- Our dividend calendar.