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."Columbia Property Dividend Yield: 5.10% Columbia Property (NYSE: CXP) shares currently have a dividend yield of 5.10%. Columbia Property Trust, Inc is an equity real estate investment trust. The firm invests in the real estate markets of the United States. It focuses on investing in and managing high-quality commercial office properties. The firm was formerly known as Wells Real Estate Investment Trust II Inc. The company has a P/E ratio of 31.95. The average volume for Columbia Property has been 503,900 shares per day over the past 30 days. Columbia Property has a market cap of $2.9 billion and is part of the real estate industry. Shares are down 7.2% 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 Columbia Property as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- 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 0.5%. 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.
- The gross profit margin for COLUMBIA PROPERTY TRUST INC is rather low; currently it is at 24.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 14.43% significantly trails the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income has decreased by 19.4% when compared to the same quarter one year ago, dropping from $24.99 million to $20.14 million.
- You can view the full Columbia Property Ratings Report.
- 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 393.0% when compared to the same quarter one year prior, rising from -$26.74 million to $78.33 million.
- RETAIL PPTYS OF AMERICA INC 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, RETAIL PPTYS OF AMERICA INC turned its bottom line around by earning $0.15 versus -$0.20 in the prior year. This year, the market expects earnings to be in line with last year ($0.15 versus $0.15).
- RPAI has underperformed the S&P 500 Index, declining 11.04% from its price level of one year ago. 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 could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- Net operating cash flow has declined marginally to $66.09 million or 5.94% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full Retail Properties of America Ratings Report.
- HT's revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 10.1%. 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 Real Estate Investment Trusts (REITs) industry. The net income increased by 85.4% when compared to the same quarter one year prior, rising from $7.64 million to $14.16 million.
- HERSHA HOSPITALITY TRUST 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, HERSHA HOSPITALITY TRUST increased its bottom line by earning $1.08 versus $0.08 in the prior year. For the next year, the market is expecting a contraction of 46.3% in earnings ($0.58 versus $1.08).
- HT has underperformed the S&P 500 Index, declining 22.08% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- 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. In comparison to the other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, HERSHA HOSPITALITY TRUST'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 Hersha Hospitality Ratings Report.
- Our dividend calendar.