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."Regal Entertainment Group Dividend Yield: 4.20% Regal Entertainment Group (NYSE: RGC) shares currently have a dividend yield of 4.20%. Regal Entertainment Group, through its subsidiaries, operates as a motion picture exhibitor in the United States. It develops, acquires, and operates multi-screen theatres primarily in mid-sized metropolitan markets and suburban growth areas of larger metropolitan markets. The company has a P/E ratio of 17.69. The average volume for Regal Entertainment Group has been 1,021,300 shares per day over the past 30 days. Regal Entertainment Group has a market cap of $3.3 billion and is part of the media industry. Shares are up 10.1% 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 Regal Entertainment Group as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and impressive record of earnings per share growth. 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:
- RGC's revenue growth has slightly outpaced the industry average of 4.8%. Since the same quarter one year prior, revenues rose by 13.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- REGAL ENTERTAINMENT GROUP 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, REGAL ENTERTAINMENT GROUP increased its bottom line by earning $0.98 versus $0.68 in the prior year. This year, the market expects an improvement in earnings ($1.08 versus $0.98).
- After a year of stock price fluctuations, the net result is that RGC'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.
- The gross profit margin for REGAL ENTERTAINMENT GROUP is rather low; currently it is at 20.56%. Regardless of RGC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.17% trails the industry average.
- You can view the full Regal Entertainment Group Ratings Report.
- 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 743.9% when compared to the same quarter one year prior, rising from $7.28 million to $61.39 million.
- After a year of stock price fluctuations, the net result is that PKY'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. 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.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, PARKWAY PROPERTIES INC's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $6.45 million or 30.36% 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 Parkway Properties Ratings Report.
- 39.07% is the gross profit margin for MACY'S INC which we consider to be strong. 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 2.01% trails the industry average.
- M, with its decline in revenue, underperformed when compared the industry average of 5.9%. Since the same quarter one year prior, revenues slightly dropped by 7.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Currently the debt-to-equity ratio of 1.84 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.22, which clearly demonstrates the inability to cover short-term cash needs.
- Net operating cash flow has significantly decreased to $8.00 million or 84.90% 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 Macy's Ratings Report.
- Our dividend calendar.