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 "Sell."Columbia Property Dividend Yield: 5.90% Columbia Property (NYSE: CXP) shares currently have a dividend yield of 5.90%. Columbia Property Trust, Inc is an equity real estate investment trust. The firm invests in the real estate markets of the United States. It focuses on investing in and managing high-quality commercial office properties. The firm was formerly known as Wells Real Estate Investment Trust II Inc. The company has a P/E ratio of 56.19. The average volume for Columbia Property has been 595,100 shares per day over the past 30 days. Columbia Property has a market cap of $2.5 billion and is part of the real estate industry. Shares are down 15.6% 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 Columbia Property as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- The share price of COLUMBIA PROPERTY TRUST INC has not done very well: it is down 22.26% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- COLUMBIA PROPERTY TRUST INC 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, COLUMBIA PROPERTY TRUST INC reported lower earnings of $0.35 versus $0.76 in the prior year. For the next year, the market is expecting a contraction of 14.3% in earnings ($0.30 versus $0.35).
- 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 81.9% when compared to the same quarter one year ago, falling from $56.23 million to $10.17 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 Real Estate Investment Trusts (REITs) industry and the overall market, COLUMBIA PROPERTY TRUST INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for COLUMBIA PROPERTY TRUST INC is currently lower than what is desirable, coming in at 25.78%. Regardless of CXP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CXP's net profit margin of 7.56% is significantly lower than the industry average.
- You can view the full Columbia Property Ratings Report.
- AGNC has underperformed the S&P 500 Index, declining 17.66% 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.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, AMERICAN CAPITAL AGENCY CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for AMERICAN CAPITAL AGENCY CORP is currently very high, coming in at 91.22%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 156.38% significantly outperformed against the industry average.
- AMERICAN CAPITAL AGENCY CORP 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, AMERICAN CAPITAL AGENCY CORP turned its bottom line around by earning $0.56 versus -$0.73 in the prior year. This year, the market expects an improvement in earnings ($2.19 versus $0.56).
- You can view the full American Capital Agency Ratings Report.
- 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 Energy Equipment & Services industry. The net income has significantly decreased by 356.0% when compared to the same quarter one year ago, falling from $595.00 million to -$1,523.00 million.
- 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 Energy Equipment & Services industry and the overall market on the basis of return on equity, NATIONAL OILWELL VARCO INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for NATIONAL OILWELL VARCO INC is currently lower than what is desirable, coming in at 25.83%. It has decreased from the same quarter the previous year.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 47.44%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 392.08% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- NATIONAL OILWELL VARCO INC 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, NATIONAL OILWELL VARCO INC swung to a loss, reporting -$2.15 versus $5.71 in the prior year. This year, the market expects an improvement in earnings (-$0.19 versus -$2.15).
- You can view the full National Oilwell Varco Ratings Report.
- Our dividend calendar.