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."Physicians Realty Dividend Yield: 5.40% Physicians Realty (NYSE: DOC) shares currently have a dividend yield of 5.40%. Physicians Realty Trust, a self-managed healthcare real estate company, focuses on the acquisition, development, ownership, and management of healthcare properties that are leased to physicians, hospitals, and healthcare delivery systems. The company has a P/E ratio of 97.41. The average volume for Physicians Realty has been 649,800 shares per day over the past 30 days. Physicians Realty has a market cap of $1.4 billion and is part of the real estate industry. Shares are down 4.2% 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 Physicians Realty as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, good cash flow from operations, impressive record of earnings per share growth and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- DOC's very impressive revenue growth greatly exceeded the industry average of 6.1%. Since the same quarter one year prior, revenues leaped by 146.0%. 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 276.9% when compared to the same quarter one year prior, rising from -$2.09 million to $3.70 million.
- Net operating cash flow has significantly increased by 443.03% to $19.19 million when compared to the same quarter last year. In addition, PHYSICIANS REALTY TR has also vastly surpassed the industry average cash flow growth rate of 9.44%.
- PHYSICIANS REALTY TR 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, PHYSICIANS REALTY TR reported poor results of -$0.19 versus -$0.11 in the prior year. This year, the market expects an improvement in earnings ($0.17 versus -$0.19).
- 41.42% is the gross profit margin for PHYSICIANS REALTY TR which we consider to be strong. Regardless of DOC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DOC's net profit margin of 10.61% is significantly lower than the industry average.
- You can view the full Physicians Realty Ratings Report.
- The revenue growth came in higher than the industry average of 5.5%. Since the same quarter one year prior, revenues rose by 17.2%. 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.
- The gross profit margin for MAIN STREET CAPITAL CORP is currently very high, coming in at 84.88%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 48.50% significantly outperformed against the industry average.
- After a year of stock price fluctuations, the net result is that MAIN'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.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Capital Markets industry and the overall market, MAIN STREET CAPITAL CORP's return on equity is below that of both the industry average and the S&P 500.
- The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Capital Markets industry average. The net income has decreased by 4.2% when compared to the same quarter one year ago, dropping from $21.57 million to $20.67 million.
- You can view the full Main Street Capital Ratings Report.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- ALON USA ENERGY INC has improved earnings per share by 5.5% 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, ALON USA ENERGY INC increased its bottom line by earning $0.55 versus $0.29 in the prior year. This year, the market expects an improvement in earnings ($1.41 versus $0.55).
- 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 9.0% when compared to the same quarter one year prior, going from $38.48 million to $41.94 million.
- 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 Oil, Gas & Consumable Fuels industry and the overall market, ALON USA ENERGY INC's return on equity exceeds that of both the industry average and the S&P 500.
- You can view the full Alon USA Energy Ratings Report.
- Our dividend calendar.