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."Oxbridge Re Holdings Dividend Yield: 9.30% Oxbridge Re Holdings (NASDAQ: OXBR) shares currently have a dividend yield of 9.30%. Oxbridge Re Holdings Limited provides reinsurance business solutions primarily to property and casualty insurers in the Gulf Coast region of the United States. It writes collateralized policies to cover property losses from specified catastrophes. The company has a P/E ratio of 5.15. The average volume for Oxbridge Re Holdings has been 6,300 shares per day over the past 30 days. Oxbridge Re Holdings has a market cap of $31.2 million and is part of the insurance industry. Shares are down 10% year-to-date as of the close of trading on Monday. 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 Oxbridge Re Holdings as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. 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:
- OXBR has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
- 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 Insurance industry and the overall market, OXBRIDGE RE HOLDINGS LTD's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for OXBRIDGE RE HOLDINGS LTD is currently very high, coming in at 92.80%. Regardless of OXBR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OXBR's net profit margin of 62.88% significantly outperformed against the industry.
- Net operating cash flow has decreased to $3.98 million or 35.40% when compared to the same quarter last year. Despite a decrease in cash flow OXBRIDGE RE HOLDINGS LTD is still fairing well by exceeding its industry average cash flow growth rate of -83.22%.
- 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 Insurance industry. The net income has significantly decreased by 46.1% when compared to the same quarter one year ago, falling from $1.38 million to $0.74 million.
- You can view the full Oxbridge Re Holdings Ratings Report.
- HEES's revenue growth has slightly outpaced the industry average of 3.9%. Since the same quarter one year prior, revenues slightly increased by 0.7%. 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.
- 48.33% is the gross profit margin for H&E EQUIPMENT SERVICES INC 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 5.33% trails the industry average.
- Net operating cash flow has declined marginally to $65.46 million or 4.81% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, H&E EQUIPMENT SERVICES INC has marginally lower results.
- The debt-to-equity ratio is very high at 6.73 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- You can view the full H&E Equipment Services Ratings Report.
- The gross profit margin for MEDALLION FINANCIAL CORP is rather high; currently it is at 62.25%. It has increased significantly from the same period last year. Along with this, the net profit margin of 73.89% significantly outperformed against the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, MEDALLION FINANCIAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- TAXI, with its decline in revenue, slightly underperformed the industry average of 4.3%. Since the same quarter one year prior, revenues fell by 13.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- MEDALLION FINANCIAL CORP's earnings per share declined by 12.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MEDALLION FINANCIAL CORP increased its bottom line by earning $1.20 versus $1.14 in the prior year. For the next year, the market is expecting a contraction of 5.0% in earnings ($1.14 versus $1.20).
- Looking at the price performance of TAXI's shares over the past 12 months, there is not much good news to report: the stock is down 32.90%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.
- You can view the full Medallion Financial Ratings Report.
- Our dividend calendar.