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 "Buy."Duke Energy Dividend Yield: 4.30% Duke Energy (NYSE: DUK) shares currently have a dividend yield of 4.30%. Duke Energy Corporation, together with its subsidiaries, operates as an energy company in the United States and Latin America. It operates through three segments: Regulated Utilities, International Energy, and Commercial Portfolio. The company has a P/E ratio of 19.59. The average volume for Duke Energy has been 3,325,600 shares per day over the past 30 days. Duke Energy has a market cap of $53.0 billion and is part of the utilities industry. Shares are up 6.7% 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 Duke Energy as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins, good cash flow from operations, solid stock price performance and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- 38.54% is the gross profit margin for DUKE ENERGY CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 12.34% is above that of the industry average.
- Net operating cash flow has increased to $1,664.00 million or 15.55% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.80%.
- Compared to where it was trading a year ago, DUK's share price has not changed very much due to (a) the relatively weak year-over-year performance of the overall market, (b) the company's stagnant earnings, and (c) other mixed results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- DUKE ENERGY CORP's earnings per share declined by 8.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DUKE ENERGY CORP increased its bottom line by earning $4.03 versus $3.46 in the prior year. This year, the market expects an improvement in earnings ($4.60 versus $4.03).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.8%. Since the same quarter one year prior, revenues slightly dropped by 7.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- You can view the full Duke Energy Ratings Report.
- Despite its growing revenue, the company underperformed as compared with the industry average of 11.9%. Since the same quarter one year prior, revenues slightly increased by 5.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- 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 Real Estate Investment Trusts (REITs) industry and the overall market, NATIONAL HEALTH INVESTORS's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for NATIONAL HEALTH INVESTORS is currently very high, coming in at 76.09%. Regardless of NHI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NHI's net profit margin of 55.82% significantly outperformed against the industry.
- Net operating cash flow has slightly increased to $41.30 million or 7.08% when compared to the same quarter last year. Despite an increase in cash flow, NATIONAL HEALTH INVESTORS's average is still marginally south of the industry average growth rate of 11.09%.
- NATIONAL HEALTH INVESTORS has improved earnings per share by 7.6% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, NATIONAL HEALTH INVESTORS increased its bottom line by earning $3.95 versus $3.03 in the prior year. For the next year, the market is expecting a contraction of 15.7% in earnings ($3.33 versus $3.95).
- You can view the full National Health Investors Ratings Report.
- The revenue growth came in higher than the industry average of 11.9%. Since the same quarter one year prior, revenues rose by 28.5%. 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.
- Compared to its closing price of one year ago, ADC's share price has jumped by 31.55%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ADC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 17.2% when compared to the same quarter one year prior, going from $6.37 million to $7.46 million.
- Net operating cash flow has significantly increased by 83.59% to $16.54 million when compared to the same quarter last year. In addition, AGREE REALTY CORP has also vastly surpassed the industry average cash flow growth rate of 11.09%.
- The gross profit margin for AGREE REALTY CORP is rather high; currently it is at 65.66%. Regardless of ADC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ADC's net profit margin of 36.89% compares favorably to the industry average.
- You can view the full Agree Realty Ratings Report.
- Our dividend calendar.