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."Six Flags Entertainment Dividend Yield: 4.50% Six Flags Entertainment (NYSE: SIX) shares currently have a dividend yield of 4.50%. Six Flags Entertainment Corporation owns and operates regional theme and water parks. Its parks offer various thrill rides, water attractions, themed areas, concerts and shows, restaurants, game venues, and retail outlets. The company has a P/E ratio of 42.87. The average volume for Six Flags Entertainment has been 798,800 shares per day over the past 30 days. Six Flags Entertainment has a market cap of $4.8 billion and is part of the leisure industry. Shares are up 19.1% 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 Six Flags Entertainment as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, increase in net income, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value. Highlights from the ratings report include:
- SIX's revenue growth has slightly outpaced the industry average of 1.4%. Since the same quarter one year prior, revenues slightly increased by 6.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, SIX FLAGS ENTERTAINMENT CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 49.8% when compared to the same quarter one year prior, rising from $105.03 million to $157.30 million.
- Net operating cash flow has increased to $240.52 million or 13.48% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 2.77%.
- The gross profit margin for SIX FLAGS ENTERTAINMENT CORP is rather high; currently it is at 65.89%. Regardless of SIX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SIX's net profit margin of 27.34% significantly outperformed against the industry.
- You can view the full Six Flags Entertainment Ratings Report.
- DFT's revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 9.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- Net operating cash flow has increased to $63.91 million or 20.15% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 6.55%.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 0.4% when compared to the same quarter one year prior, going from $25.77 million to $25.87 million.
- After a year of stock price fluctuations, the net result is that DFT's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full Dupont Fabros Technology Ratings Report.
- The revenue growth greatly exceeded the industry average of 36.8%. Since the same quarter one year prior, revenues rose by 26.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- SHIP FINANCE INTL LTD 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. During the past fiscal year, SHIP FINANCE INTL LTD increased its bottom line by earning $1.25 versus $1.01 in the prior year. This year, the market expects an improvement in earnings ($2.17 versus $1.25).
- 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 203.9% when compared to the same quarter one year prior, rising from $22.36 million to $67.94 million.
- 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 Oil, Gas & Consumable Fuels industry and the overall market, SHIP FINANCE INTL LTD's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for SHIP FINANCE INTL LTD is currently very high, coming in at 71.74%. It has increased significantly from the same period last year. Along with this, the net profit margin of 73.83% significantly outperformed against the industry average.
- You can view the full Ship Finance International Ratings Report.
- Our dividend calendar.