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."Gramercy Property Dividend Yield: 6.50% Gramercy Property (NYSE: GPT) shares currently have a dividend yield of 6.50%. Gramercy Property Trust Inc is an equity real estate investment trust. The firm invests in the real estate markets of the United States. It makes investments in industrial and office properties to create its portfolio. The firm was formerly known as Gramercy Capital Corp. The company has a P/E ratio of 130.67. The average volume for Gramercy Property has been 2,540,600 shares per day over the past 30 days. Gramercy Property has a market cap of $1.9 billion and is part of the real estate industry. Shares are down 71.6% year-to-date as of the close of trading on Monday. 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 Gramercy Property as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- GPT's very impressive revenue growth greatly exceeded the industry average of 6.1%. Since the same quarter one year prior, revenues leaped by 86.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- GRAMERCY PROPERTY 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. During the past fiscal year, GRAMERCY PROPERTY TRUST turned its bottom line around by earning $0.64 versus -$0.31 in the prior year.
- 36.13% is the gross profit margin for GRAMERCY PROPERTY TRUST which we consider to be strong. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, GPT's net profit margin of 3.10% significantly trails the industry average.
- GPT has underperformed the S&P 500 Index, declining 9.72% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- 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 Real Estate Investment Trusts (REITs) industry and the overall market, GRAMERCY PROPERTY TRUST's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Gramercy Property Ratings Report.
- MIC's revenue growth has slightly outpaced the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 7.0%. 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 MACQUARIE INFRASTRUCTURE CP is rather high; currently it is at 56.85%. 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 2.55% trails the industry average.
- Compared to where it was trading a year ago, MIC's share price has not changed very much due to (a) the relatively weak year-over-year performance of the overall market, (b) the company's stagnant earnings, and (c) other mixed results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Transportation Infrastructure industry. The net income has significantly decreased by 98.9% when compared to the same quarter one year ago, falling from $990.99 million to $10.64 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. Compared to other companies in the Transportation Infrastructure industry and the overall market, MACQUARIE INFRASTRUCTURE CP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Macquarie Infrastructure Ratings Report.
- The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 36.8%. Since the same quarter one year prior, revenues fell by 36.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- ROYAL DUTCH SHELL PLC 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ROYAL DUTCH SHELL PLC reported lower earnings of $4.70 versus $5.18 in the prior year. This year, the market expects an improvement in earnings ($6.20 versus $4.70).
- 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 266.2% when compared to the same quarter one year ago, falling from $4,463.00 million to -$7,416.00 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 33.27%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 265.71% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- You can view the full Royal Dutch Shell Ratings Report.
- Our dividend calendar.