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."Suburban Propane Partners Dividend Yield: 11.90% Suburban Propane Partners (NYSE: SPH) shares currently have a dividend yield of 11.90%. Suburban Propane Partners, L.P., through its subsidiaries, engages in the retail marketing and distribution of propane, fuel oil, and refined fuels. The company has a P/E ratio of 44.43. The average volume for Suburban Propane Partners has been 404,800 shares per day over the past 30 days. Suburban Propane Partners has a market cap of $1.8 billion and is part of the utilities industry. Shares are up 23.4% 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 Suburban Propane Partners as a hold. The company's strongest point has been its a solid financial position based on a variety of debt and liquidity measures that we have looked at. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income. Highlights from the ratings report include:
- SPH, with its decline in revenue, underperformed when compared the industry average of 24.2%. Since the same quarter one year prior, revenues fell by 34.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The debt-to-equity ratio of 1.44 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, SPH has a quick ratio of 0.68, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- SUBURBAN PROPANE PRTNRS -LP 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 two years. We anticipate that this should continue in the coming year. During the past fiscal year, SUBURBAN PROPANE PRTNRS -LP reported lower earnings of $1.38 versus $1.55 in the prior year. For the next year, the market is expecting a contraction of 5.8% in earnings ($1.30 versus $1.38).
- 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 Gas Utilities industry. The net income has significantly decreased by 78.0% when compared to the same quarter one year ago, falling from $55.81 million to $12.27 million.
- You can view the full Suburban Propane Partners Ratings Report.
- The revenue growth greatly exceeded the industry average of 34.6%. Since the same quarter one year prior, revenues rose by 28.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- SHIP FINANCE INTL LTD 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. This trend suggests that the performance of the business is improving. During the past fiscal year, SHIP FINANCE INTL LTD increased its bottom line by earning $1.87 versus $1.25 in the prior year. This year, the market expects an improvement in earnings ($2.39 versus $1.87).
- After a year of stock price fluctuations, the net result is that SFL's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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.
- The debt-to-equity ratio of 1.34 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, SFL's quick ratio is somewhat strong at 1.32, demonstrating the ability to handle short-term liquidity needs.
- You can view the full Ship Finance International Ratings Report.
- Despite its growing revenue, the company underperformed as compared with the industry average of 7.9%. Since the same quarter one year prior, revenues slightly increased by 6.6%. 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.
- 39.48% is the gross profit margin for EASTGROUP PROPERTIES which we consider to be strong. Regardless of EGP'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 18.66% trails the industry average.
- EASTGROUP PROPERTIES's earnings per share declined by 12.5% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, EASTGROUP PROPERTIES reported lower earnings of $1.48 versus $1.52 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $1.48).
- The change in net income 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 has decreased by 10.1% when compared to the same quarter one year ago, dropping from $12.72 million to $11.44 million.
- You can view the full EastGroup Properties Ratings Report.
- Our dividend calendar.