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: 9.40% America First Multifamily Investors (NASDAQ: ATAX) shares currently have a dividend yield of 9.40%. 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 or permanent financing for multifamily and student housing, and commercial properties. The company has a P/E ratio of 15.71. The average volume for America First Multifamily Investors has been 91,400 shares per day over the past 30 days. America First Multifamily Investors has a market cap of $321.8 million and is part of the real estate industry. Shares are up 5.3% 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 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 find that we feel that the company's cash flow from its operations has been weak overall. Highlights from the ratings report include:
- ATAX's very impressive revenue growth greatly exceeded the industry average of 10.4%. 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).
- 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. When compared to other companies in the Thrifts & Mortgage Finance industry and the overall market, AMERICA FIRST MULTIFAMILY-LP's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $5.11 million or 21.39% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full America First Multifamily Investors Ratings Report.
- The revenue fell significantly faster than the industry average of 8.1%. Since the same quarter one year prior, revenues fell by 40.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- NEW YORK MORTGAGE 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. 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, NEW YORK MORTGAGE TRUST INC reported lower earnings of $0.62 versus $1.47 in the prior year. This year, the market expects an improvement in earnings ($0.68 versus $0.62).
- 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 90.0% when compared to the same quarter one year ago, falling from $41.98 million to $4.21 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, NEW YORK MORTGAGE TRUST INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full New York Mortgage Ratings Report.
- Net operating cash flow has significantly increased by 106.92% to $15.12 million when compared to the same quarter last year. In addition, FIFTH STREET FINANCE CORP has also vastly surpassed the industry average cash flow growth rate of -2.34%.
- The gross profit margin for FIFTH STREET FINANCE CORP is rather high; currently it is at 62.39%. 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 -96.56% is in-line with the industry average.
- Despite the weak revenue results, FSC has outperformed against the industry average of 22.6%. Since the same quarter one year prior, revenues slightly dropped by 0.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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 Capital Markets industry. The net income has significantly decreased by 120.9% when compared to the same quarter one year ago, falling from -$28.47 million to -$62.89 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 Capital Markets industry and the overall market on the basis of return on equity, FIFTH STREET FINANCE CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full Fifth Street Finance Ratings Report.
- Our dividend calendar.