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."Duke Energy Corporation Dividend Yield: 4.90% Duke Energy Corporation (NYSE: DUK) shares currently have a dividend yield of 4.90%. Duke Energy Corporation, together with its subsidiaries, operates as an energy company in the United States and Latin America. It operates through three segments: Regulated Utilities, International Energy, and Commercial Power. The company has a P/E ratio of 19.69. The average volume for Duke Energy Corporation has been 3,283,000 shares per day over the past 30 days. Duke Energy Corporation has a market cap of $46.6 billion and is part of the utilities industry. Shares are down 18.9% 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 Duke Energy Corporation as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and growth in earnings per share. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- DUK's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 1.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 40.17% is the gross profit margin for DUKE ENERGY CORP which we consider to be strong. 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 14.37% trails the industry average.
- DUKE ENERGY CORP has improved earnings per share by 8.8% 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, DUKE ENERGY CORP reported lower earnings of $3.46 versus $3.63 in the prior year. This year, the market expects an improvement in earnings ($4.59 versus $3.46).
- Even though the current debt-to-equity ratio is 1.07, it is still below the industry average, suggesting that this level of debt is acceptable within the Electric Utilities industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.32 is very low and demonstrates very weak liquidity.
- Net operating cash flow has declined marginally to $2,517.00 million or 1.21% when compared to the same quarter last year. Despite a decrease in cash flow of 1.21%, DUKE ENERGY CORP is in line with the industry average cash flow growth rate of -7.98%.
- You can view the full Duke Energy Corporation Ratings Report.
- The revenue growth came in higher than the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 30.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- NATIONAL HEALTH INVESTORS has improved earnings per share by 17.1% 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 two years. We feel that this trend should continue. During the past fiscal year, NATIONAL HEALTH INVESTORS increased its bottom line by earning $3.03 versus $2.76 in the prior year. This year, the market expects an improvement in earnings ($3.35 versus $3.03).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 33.0% when compared to the same quarter one year prior, rising from $25.25 million to $33.60 million.
- Net operating cash flow has increased to $40.80 million or 29.13% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 9.44%.
- The gross profit margin for NATIONAL HEALTH INVESTORS is currently very high, coming in at 76.57%. Regardless of NHI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NHI's net profit margin of 57.90% significantly outperformed against the industry.
- You can view the full National Health Investors Ratings Report.
- CALM's very impressive revenue growth greatly exceeded the industry average of 6.5%. Since the same quarter one year prior, revenues leaped by 70.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CALM's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CALM has a quick ratio of 2.17, which demonstrates the ability of the company to cover short-term liquidity needs.
- 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 Food Products industry and the overall market, CAL-MAINE FOODS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- 44.95% is the gross profit margin for CAL-MAINE FOODS INC which we consider to be strong. It has increased significantly from the same period last year. Along with this, the net profit margin of 23.45% is above that of the industry average.
- You can view the full Cal-Maine Foods Ratings Report.
- Our dividend calendar.