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."Retail Properties of America Dividend Yield: 4.20% Retail Properties of America (NYSE: RPAI) shares currently have a dividend yield of 4.20%. Retail Properties of America, Inc. is a real estate investment trust. It engages in acquisition, development and management of properties. The trust invests in the real estate markets of United States. The company has a P/E ratio of 25.32. The average volume for Retail Properties of America has been 1,050,500 shares per day over the past 30 days. Retail Properties of America has a market cap of $3.8 billion and is part of the real estate industry. Shares are up 9.1% 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 Retail Properties of America as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, reasonable valuation levels and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including poor profit margins and weak operating cash flow. Highlights from the ratings report include:
- 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 262.7% when compared to the same quarter one year prior, rising from $13.08 million to $47.43 million.
- After a year of stock price fluctuations, the net result is that RPAI'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.
- The gross profit margin for RETAIL PPTYS OF AMERICA INC is currently lower than what is desirable, coming in at 33.69%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 31.90% trails that of the industry average.
- Net operating cash flow has decreased to $53.25 million or 25.12% 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 Retail Properties of America Ratings Report.
- Net operating cash flow has significantly increased by 283.41% to $71.90 million when compared to the same quarter last year. In addition, DELEK US HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of -49.05%.
- Despite the weak revenue results, DK has outperformed against the industry average of 24.6%. Since the same quarter one year prior, revenues slightly dropped by 3.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- DK's debt-to-equity ratio of 0.90 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. Despite the fact that DK's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.68 is low and demonstrates weak liquidity.
- DELEK US HOLDINGS 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, DELEK US HOLDINGS INC reported lower earnings of $0.29 versus $3.34 in the prior year. For the next year, the market is expecting a contraction of 324.1% in earnings (-$0.65 versus $0.29).
- The gross profit margin for DELEK US HOLDINGS INC is currently extremely low, coming in at 1.18%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.64% trails that of the industry average.
- You can view the full Delek US Holdings Ratings Report.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Capital Markets industry and the overall market, APOLLO GLOBAL MANAGEMENT LLC's return on equity exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has significantly increased by 126.47% to $124.19 million when compared to the same quarter last year. In addition, APOLLO GLOBAL MANAGEMENT LLC has also vastly surpassed the industry average cash flow growth rate of -198.91%.
- APO, with its very weak revenue results, has greatly underperformed against the industry average of 24.5%. Since the same quarter one year prior, revenues plummeted by 60.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The share price of APOLLO GLOBAL MANAGEMENT LLC has not done very well: it is down 24.82% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full Apollo Global Management Ratings Report.
- Our dividend calendar.