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." LTC Properties Dividend Yield: 4.90% LTC Properties (NYSE: LTC) shares currently have a dividend yield of 4.90%. LTC Properties, Inc. operates as a health care real estate investment trust (REIT) in the United States. The company has a P/E ratio of 21.68. The average volume for LTC Properties has been 224,400 shares per day over the past 30 days. LTC Properties has a market cap of $1.6 billion and is part of the real estate industry. Shares are up 5.1% 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 LTC Properties as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, expanding profit margins, good cash flow from operations and growth in earnings per share. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 18.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for LTC PROPERTIES INC is currently very high, coming in at 78.92%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 56.22% significantly outperformed against the industry average.
- Net operating cash flow has increased to $26.58 million or 10.50% when compared to the same quarter last year. In addition, LTC PROPERTIES INC has also modestly surpassed the industry average cash flow growth rate of 9.43%.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 14.7% when compared to the same quarter one year prior, going from $17.12 million to $19.65 million.
- LTC PROPERTIES INC has improved earnings per share by 13.0% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, LTC PROPERTIES INC increased its bottom line by earning $1.99 versus $1.56 in the prior year. For the next year, the market is expecting a contraction of 0.5% in earnings ($1.98 versus $1.99).
- You can view the full LTC Properties Ratings Report.