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."Toronto-Dominion Bank Dividend Yield: 4.10% Toronto-Dominion Bank (NYSE: TD) shares currently have a dividend yield of 4.10%. The Toronto-Dominion Bank, together with its subsidiaries, provides various banking products and financial services worldwide. The company operates through Canadian Retail, U.S. Retail, and Wholesale Banking segments. The company has a P/E ratio of 10.57. The average volume for Toronto-Dominion Bank has been 1,452,000 shares per day over the past 30 days. Toronto-Dominion Bank has a market cap of $66.3 billion and is part of the banking industry. Shares are down 11.8% year-to-date as of the close of trading on Tuesday. 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 Toronto-Dominion Bank as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity. Highlights from the ratings report include:
- TD's revenue growth has slightly outpaced the industry average of 1.4%. Since the same quarter one year prior, revenues slightly increased by 6.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- TORONTO DOMINION BANK 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 two years. During the past fiscal year, TORONTO DOMINION BANK increased its bottom line by earning $4.21 versus $4.13 in the prior year.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Commercial Banks industry average. The net income increased by 5.3% when compared to the same quarter one year prior, going from $1,719.00 million to $1,810.00 million.
- 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. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, TORONTO DOMINION BANK has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- TD has underperformed the S&P 500 Index, declining 15.73% 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.
- You can view the full Toronto-Dominion Bank 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 34915.2% when compared to the same quarter one year prior, rising from $0.07 million to $23.11 million.
- Net operating cash flow has increased to $140.36 million or 32.09% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 9.39%.
- The gross profit margin for IRON MOUNTAIN INC is rather high; currently it is at 57.45%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, IRM's net profit margin of 3.09% significantly trails the industry average.
- 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, IRON MOUNTAIN INC's return on equity exceeds that of both the industry average and the S&P 500.
- This stock's share value has moved by only 37.23% over the past year. 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 Iron Mountain Ratings Report.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Wireless Telecommunication Services industry. The net income increased by 39.8% when compared to the same quarter one year prior, rising from $332.00 million to $464.00 million.
- RCI's revenue growth trails the industry average of 14.1%. Since the same quarter one year prior, revenues slightly increased by 4.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 39.95% is the gross profit margin for ROGERS COMMUNICATIONS which we consider to be strong. Regardless of RCI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 13.71% trails the industry average.
- RCI has underperformed the S&P 500 Index, declining 12.24% 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.
- The debt-to-equity ratio is very high at 3.02 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.35, which clearly demonstrates the inability to cover short-term cash needs.
- You can view the full Rogers Communications Ratings Report.
- Our dividend calendar.