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."Dupont Fabros Technology Dividend Yield: 6.10% Dupont Fabros Technology (NYSE: DFT) shares currently have a dividend yield of 6.10%. DuPont Fabros Technology, Inc., a real estate investment trust (REIT), engages in the ownership, acquisition, development, operation, management, and lease of large-scale data center facilities in the United States. The company has a P/E ratio of 28.39. The average volume for Dupont Fabros Technology has been 588,300 shares per day over the past 30 days. Dupont Fabros Technology has a market cap of $2.0 billion and is part of the real estate industry. Shares are down 6.6% 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 Dupont Fabros Technology as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, increase in net income 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:
- DFT's revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 9.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- Net operating cash flow has increased to $63.91 million or 20.15% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 9.39%.
- 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 Real Estate Investment Trusts (REITs) industry average. The net income increased by 0.4% when compared to the same quarter one year prior, going from $25.77 million to $25.87 million.
- 41.10% is the gross profit margin for DUPONT FABROS TECHNOLOGY INC which we consider to be strong. Regardless of DFT'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 22.43% trails the industry average.
- You can view the full Dupont Fabros Technology Ratings Report.
- LIBERTY 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. We feel that this trend should continue. During the past fiscal year, LIBERTY PROPERTY TRUST increased its bottom line by earning $1.15 versus $0.70 in the prior year. This year, the market expects an improvement in earnings ($1.31 versus $1.15).
- 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 165.3% when compared to the same quarter one year prior, rising from $34.42 million to $91.33 million.
- 44.30% is the gross profit margin for LIBERTY PROPERTY TRUST which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 44.97% significantly outperformed against the industry average.
- Net operating cash flow has increased to $126.58 million or 22.91% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 9.39%.
- You can view the full Liberty Property Ratings Report.
- DUK's revenue growth has slightly outpaced the industry average of 0.6%. Since the same quarter one year prior, revenues slightly increased by 1.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 40.17% is the gross profit margin for DUKE ENERGY CORP which we consider to be strong. 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 14.37% trails the industry average.
- DUKE ENERGY CORP has improved earnings per share by 8.8% 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, DUKE ENERGY CORP reported lower earnings of $3.46 versus $3.63 in the prior year. This year, the market expects an improvement in earnings ($4.58 versus $3.46).
- Even though the current debt-to-equity ratio is 1.07, it is still below the industry average, suggesting that this level of debt is acceptable within the Electric Utilities industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.32 is very low and demonstrates very weak liquidity.
- 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. When compared to other companies in the Electric Utilities industry and the overall market, DUKE ENERGY CORP's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Duke Energy Corporation Ratings Report.
- Our dividend calendar.