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."Lamar Advertising Dividend Yield: 4.60% Lamar Advertising (NASDAQ: LAMR) shares currently have a dividend yield of 4.60%. Lamar Advertising Company is a publicly owned equity real estate investment trust. The firm primarily engages in selling advertising space on billboards, buses, shelters, benches, and logo plates. Lamar Advertising Company was founded in 1902 and is headquartered in Baton Rouge, Louisiana. The company has a P/E ratio of 22.85. The average volume for Lamar Advertising has been 528,400 shares per day over the past 30 days. Lamar Advertising has a market cap of $6.3 billion and is part of the real estate industry. Shares are up 7.8% 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 Lamar Advertising as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and expanding profit margins. We feel its strengths outweigh the fact that the company shows weak operating cash flow. Highlights from the ratings report include:
- LAMR's revenue growth has slightly outpaced the industry average of 11.9%. Since the same quarter one year prior, revenues rose by 11.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 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. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- LAMAR ADVERTISING CO has improved earnings per share by 26.2% 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. We feel that this trend should continue. During the past fiscal year, LAMAR ADVERTISING CO increased its bottom line by earning $2.71 versus $2.66 in the prior year. This year, the market expects an improvement in earnings ($3.09 versus $2.71).
- 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 26.0% when compared to the same quarter one year prior, rising from $40.72 million to $51.31 million.
- The gross profit margin for LAMAR ADVERTISING CO is rather high; currently it is at 62.29%. Regardless of LAMR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LAMR's net profit margin of 15.15% is significantly lower than the industry average.
- You can view the full Lamar Advertising Ratings Report.
- The revenue growth greatly exceeded the industry average of 24.5%. Since the same quarter one year prior, revenues rose by 14.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TESORO LOGISTICS LP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 53.3% when compared to the same quarter one year prior, rising from $60.00 million to $92.00 million.
- Net operating cash flow has slightly increased to $161.00 million or 5.92% when compared to the same quarter last year. In addition, TESORO LOGISTICS LP has also vastly surpassed the industry average cash flow growth rate of -48.72%.
- TESORO LOGISTICS LP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, TESORO LOGISTICS LP increased its bottom line by earning $2.34 versus $1.42 in the prior year. This year, the market expects an improvement in earnings ($2.80 versus $2.34).
- You can view the full Tesoro Logistics Ratings Report.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 3.9% when compared to the same quarter one year prior, going from $636.10 million to $661.20 million.
- ENTERPRISE PRODS PRTNRS -LP reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, ENTERPRISE PRODS PRTNRS -LP reported lower earnings of $1.26 versus $1.48 in the prior year. This year, the market expects an improvement in earnings ($1.32 versus $1.26).
- EPD, with its decline in revenue, slightly underperformed the industry average of 24.5%. Since the same quarter one year prior, revenues fell by 33.0%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- The gross profit margin for ENTERPRISE PRODS PRTNRS -LP is rather low; currently it is at 24.31%. Regardless of EPD's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, EPD's net profit margin of 13.20% significantly outperformed against the industry.
- You can view the full Enterprise Products Partners Ratings Report.
- Our dividend calendar.