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."Greenhill Dividend Yield: 8.80% Greenhill (NYSE: GHL) shares currently have a dividend yield of 8.80%. Greenhill & Co., Inc., together with its subsidiaries, operates as an independent investment bank for corporations, partnerships, institutions, and governments worldwide. The company has a P/E ratio of 28.03. The average volume for Greenhill has been 500,600 shares per day over the past 30 days. Greenhill has a market cap of $609.4 million and is part of the financial services industry. Shares are down 29.2% 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 Greenhill as a hold. Among the primary strengths of the company is its revenue growth. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, poor profit margins and deteriorating net income. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 24.3%. Since the same quarter one year prior, revenues slightly increased by 8.1%. 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.
- GREENHILL & CO INC's earnings per share declined by 44.0% 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, GREENHILL & CO INC reported lower earnings of $0.82 versus $1.45 in the prior year. This year, the market expects an improvement in earnings ($1.35 versus $0.82).
- The change in net income from the same quarter one year ago has exceeded that of the Capital Markets industry average, but is less than that of the S&P 500. The net income has significantly decreased by 42.7% when compared to the same quarter one year ago, falling from $7.60 million to $4.36 million.
- The gross profit margin for GREENHILL & CO INC is currently extremely low, coming in at 12.04%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.51% trails that of the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 52.80%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 44.00% 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, GHL is still more expensive than most of the other companies in its industry.
- You can view the full Greenhill Ratings Report.
- GOV's revenue growth has slightly outpaced the industry average of 11.9%. Since the same quarter one year prior, revenues rose by 17.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 152.1% when compared to the same quarter one year prior, rising from -$33.37 million to $17.39 million.
- Net operating cash flow has increased to $31.21 million or 10.49% when compared to the same quarter last year. Despite an increase in cash flow, GOVERNMENT PPTYS INCOME TR's average is still marginally south of the industry average growth rate of 11.09%.
- After a year of stock price fluctuations, the net result is that GOV'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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, GOVERNMENT PPTYS INCOME TR's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Government Properties Income Ratings Report.
- OHI's very impressive revenue growth greatly exceeded the industry average of 11.9%. Since the same quarter one year prior, revenues leaped by 59.3%. 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.
- The gross profit margin for OMEGA HEALTHCARE INVS INC is rather high; currently it is at 52.03%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, OHI's net profit margin of 26.09% is significantly lower than the industry average.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, OHI has underperformed the S&P 500 Index, declining 15.15% 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.
- 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, OMEGA HEALTHCARE INVS INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Omega Healthcare Investors Ratings Report.
- Our dividend calendar.