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."America First Multifamily Investors Dividend Yield: 9.50% America First Multifamily Investors (NASDAQ: ATAX) shares currently have a dividend yield of 9.50%. America First Multifamily Investors, L.P. acquires, holds, sells, and deals in a portfolio of mortgage revenue bonds that have been issued to provide construction and/or permanent financing for multifamily and student housing, and commercial properties. The company has a P/E ratio of 15.44. The average volume for America First Multifamily Investors has been 127,700 shares per day over the past 30 days. America First Multifamily Investors has a market cap of $316.3 million and is part of the real estate industry. Shares are up 3.4% 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 America First Multifamily Investors as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow. Highlights from the ratings report include:
- ATAX's very impressive revenue growth greatly exceeded the industry average of 7.1%. Since the same quarter one year prior, revenues leaped by 77.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- AMERICA FIRST MULTIFAMILY-LP 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, AMERICA FIRST MULTIFAMILY-LP increased its bottom line by earning $0.35 versus $0.25 in the prior year. This year, the market expects an improvement in earnings ($0.36 versus $0.35).
- Net operating cash flow has decreased to $5.11 million or 21.39% when compared to the same quarter last year. Despite a decrease in cash flow of 21.39%, AMERICA FIRST MULTIFAMILY-LP is still significantly exceeding the industry average of -128.33%.
- ATAX has underperformed the S&P 500 Index, declining 5.75% 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.
- You can view the full America First Multifamily Investors Ratings Report.
- CLMS, with its decline in revenue, slightly underperformed the industry average of 1.8%. Since the same quarter one year prior, revenues slightly dropped by 8.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 43.33% is the gross profit margin for CALAMOS ASSET MANAGEMENT INC which we consider to be strong. Regardless of CLMS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CLMS's net profit margin of 1.49% is significantly lower than the industry average.
- CALAMOS ASSET MANAGEMENT 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, CALAMOS ASSET MANAGEMENT INC reported lower earnings of $0.19 versus $0.71 in the prior year. This year, the market expects an improvement in earnings ($0.30 versus $0.19).
- Net operating cash flow has decreased to $20.27 million or 37.68% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 36.88%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 80.00% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, CLMS is still more expensive than most of the other companies in its industry.
- You can view the full Calamos Asset Management Ratings Report.
- 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 Commercial Banks industry and the overall market, CORPBANCA's return on equity exceeds that of both the industry average and the S&P 500.
- 44.87% is the gross profit margin for CORPBANCA which we consider to be strong. Regardless of BCA'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 10.64% trails the industry average.
- BCA, with its decline in revenue, underperformed when compared the industry average of 5.4%. Since the same quarter one year prior, revenues fell by 22.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The share price of CORPBANCA has not done very well: it is down 13.91% 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. 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 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 Commercial Banks industry. The net income has significantly decreased by 50.6% when compared to the same quarter one year ago, falling from $120.32 million to $59.37 million.
- You can view the full Corpbanca Ratings Report.
- Our dividend calendar.