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." Trustmark Dividend Yield: 4.20% Trustmark (NASDAQ: TRMK) shares currently have a dividend yield of 4.20%. Trustmark Corporation operates as the bank holding company for Trustmark National Bank, which provides banking and other financial solutions to individuals and corporate institutions in Alabama, Florida, Mississippi, Tennessee, and Texas. The company has a P/E ratio of 12.92. The average volume for Trustmark has been 573,000 shares per day over the past 30 days. Trustmark has a market cap of $1.5 billion and is part of the banking industry. Shares are down 3.7% year-to-date as of the close of trading on Thursday. 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 Trustmark as a hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- The gross profit margin for TRUSTMARK CORP is currently very high, coming in at 93.56%. Regardless of TRMK'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 19.29% trails the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Commercial Banks industry average, but is greater than that of the S&P 500. The net income has decreased by 0.8% when compared to the same quarter one year ago, dropping from $28.07 million to $27.86 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. When compared to other companies in the Commercial Banks industry and the overall market, TRUSTMARK CORP's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Trustmark Ratings Report.