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."Tesoro Logistics Dividend Yield: 5.80% Tesoro Logistics (NYSE: TLLP) shares currently have a dividend yield of 5.80%. Tesoro Logistics LP owns, operates, develops, and acquires logistics assets related to crude oil and refined products in the United States. It operates in three segments: Gathering, Processing, and Terminalling and Transportation. The company has a P/E ratio of 39.54. The average volume for Tesoro Logistics has been 411,100 shares per day over the past 30 days. Tesoro Logistics has a market cap of $4.6 billion and is part of the energy industry. Shares are down 12.6% year-to-date as of the close of trading on Friday. 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 Tesoro Logistics as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- TLLP's very impressive revenue growth greatly exceeded the industry average of 36.8%. Since the same quarter one year prior, revenues leaped by 87.5%. 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 Oil, Gas & Consumable Fuels industry. The net income increased by 128.4% when compared to the same quarter one year prior, rising from $32.40 million to $74.00 million.
- TESORO LOGISTICS LP 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, TESORO LOGISTICS LP reported lower earnings of $1.42 versus $1.45 in the prior year. This year, the market expects an improvement in earnings ($2.55 versus $1.42).
- 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 Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, TESORO LOGISTICS LP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The debt-to-equity ratio of 1.36 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, TLLP maintains a poor quick ratio of 0.84, which illustrates the inability to avoid short-term cash problems.
- You can view the full Tesoro Logistics Ratings Report.
- Despite its growing revenue, the company underperformed as compared with the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 1.2%. 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.
- 44.56% is the gross profit margin for RAYONIER INC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, RYN's net profit margin of 12.96% significantly trails the industry average.
- Net operating cash flow has slightly increased to $57.52 million or 5.86% when compared to the same quarter last year. Despite an increase in cash flow, RAYONIER INC's average is still marginally south of the industry average growth rate of 9.44%.
- RAYONIER INC's earnings per share declined by 36.0% 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, RAYONIER INC reported lower earnings of $0.43 versus $0.80 in the prior year. For the next year, the market is expecting a contraction of 11.6% in earnings ($0.38 versus $0.43).
- 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 39.9% when compared to the same quarter one year ago, falling from $32.70 million to $19.67 million.
- You can view the full Rayonier Ratings Report.
- The gross profit margin for CHIMERA INVESTMENT CORP is currently very high, coming in at 75.81%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, CIM's net profit margin of -27.66% significantly underperformed when compared to the industry average.
- 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 112.8% when compared to the same quarter one year ago, falling from $377.58 million to -$48.26 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CHIMERA INVESTMENT CORP's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Chimera Investment Ratings Report.
- Our dividend calendar.