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."Enviva Partners Dividend Yield: 8.90% Enviva Partners (NYSE: EVA) shares currently have a dividend yield of 8.90%. Enviva Partners, LP produces and supplies utility-grade wood pellets to power generators. Enviva Partners GP, LLC operates as the general partner of the company. Enviva Partners, LP was founded in 2013 and is based in Bethesda, Maryland. The company has a P/E ratio of 28.90. The average volume for Enviva Partners has been 96,200 shares per day over the past 30 days. Enviva Partners has a market cap of $565.2 million and is part of the materials & construction industry. Shares are up 33.3% 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 Enviva Partners as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall. Highlights from the ratings report include:
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- ENVIVA PARTNERS LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($1.45 versus $0.97).
- Despite the weak revenue results, EVA has outperformed against the industry average of 22.9%. Since the same quarter one year prior, revenues slightly dropped by 7.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- EVA's debt-to-equity ratio of 0.65 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.97 is weak.
- The gross profit margin for ENVIVA PARTNERS LP is rather low; currently it is at 19.83%. Regardless of EVA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, EVA's net profit margin of 7.09% compares favorably to the industry average.
- You can view the full Enviva Partners Ratings Report.
- Net operating cash flow has significantly increased by 68.92% to $3.84 million when compared to the same quarter last year. In addition, ARBOR REALTY TRUST INC has also vastly surpassed the industry average cash flow growth rate of 11.95%.
- 45.76% is the gross profit margin for ARBOR REALTY TRUST INC which we consider to be strong. Regardless of ABR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ABR's net profit margin of 9.12% is significantly lower than the industry average.
- 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 82.1% when compared to the same quarter one year ago, falling from $16.90 million to $3.02 million.
- 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, ARBOR REALTY TRUST INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Arbor Realty Ratings Report.
- Net operating cash flow has significantly increased by 201.75% to $75.81 million when compared to the same quarter last year. In addition, MEDLEY CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of -198.91%.
- The gross profit margin for MEDLEY CAPITAL CORP is rather high; currently it is at 66.33%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, MCC's net profit margin of 1.45% significantly trails the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 24.5%. Since the same quarter one year prior, revenues fell by 16.5%. 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 96.2% when compared to the same quarter one year ago, falling from $11.78 million to $0.45 million.
- 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 Capital Markets industry and the overall market, MEDLEY CAPITAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Medley Capital Ratings Report.
- Our dividend calendar.