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."Banco Santander Brasil SA/Brazil Dividend Yield: 12.50% Banco Santander Brasil SA/Brazil (NYSE: BSBR) shares currently have a dividend yield of 12.50%. Banco Santander (Brasil) S.A. provides banking products and services in Brazil and internationally. The company offers commercial banking, investment, mortgage, leasing, credit card, and foreign exchange services, as well as various lending and financing services. The average volume for Banco Santander Brasil SA/Brazil has been 1,202,800 shares per day over the past 30 days. Banco Santander Brasil SA/Brazil has a market cap of $25.4 billion and is part of the banking industry. Shares are down 18% 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 Banco Santander Brasil SA/Brazil as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, BANCO SANTANDER BRASIL -ADR has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- BSBR, with its very weak revenue results, has greatly underperformed against the industry average of 1.4%. Since the same quarter one year prior, revenues plummeted by 81.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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 Commercial Banks industry. The net income has significantly decreased by 105.7% when compared to the same quarter one year ago, falling from $403.93 million to -$23.18 million.
- Net operating cash flow has significantly decreased to $1,373.12 million or 84.44% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full Banco Santander Brasil SA/Brazil Ratings Report.
- The gross profit margin for PENNANTPARK FLOATING RT CAP is currently very high, coming in at 84.49%. 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 15.59% trails the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.6%. Since the same quarter one year prior, revenues slightly dropped by 5.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- PENNANTPARK FLOATING RT CAP 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, PENNANTPARK FLOATING RT CAP reported lower earnings of $0.82 versus $1.38 in the prior year. This year, the market expects an improvement in earnings ($1.02 versus $0.82).
- 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 Capital Markets industry. The net income has significantly decreased by 46.7% when compared to the same quarter one year ago, falling from $2.28 million to $1.22 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Capital Markets industry and the overall market, PENNANTPARK FLOATING RT CAP's return on equity is below that of both the industry average and the S&P 500.
- You can view the full PennantPark Floating Rate Capital Ratings Report.
- The revenue growth came in higher than the industry average of 5.6%. Since the same quarter one year prior, revenues rose by 17.6%. 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 TRIPLEPOINT VENTURE GWTH BDC is rather high; currently it is at 68.44%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 61.81% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 59.04% to -$15.35 million when compared to the same quarter last year. Despite an increase in cash flow of 59.04%, TRIPLEPOINT VENTURE GWTH BDC is still growing at a significantly lower rate than the industry average of 276.16%.
- TRIPLEPOINT VENTURE GWTH BDC's earnings per share declined by 27.6% in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($1.46 versus $1.24).
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 28.09%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 27.65% compared to the year-earlier quarter. 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.
- You can view the full TriplePoint Venture Growth BDC Ratings Report.
- Our dividend calendar.