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 29.14. The average volume for Enviva Partners has been 82,000 shares per day over the past 30 days. Enviva Partners has a market cap of $569.9 million and is part of the materials & construction industry. Shares are up 27.6% 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 ($1.54 versus $0.97).
- Despite the weak revenue results, EVA has outperformed against the industry average of 24.6%. 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.
- 42.42% is the gross profit margin for MARTIN MIDSTREAM PARTNERS LP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 7.05% is above that of the industry average.
- 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. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MARTIN MIDSTREAM PARTNERS LP's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Net operating cash flow has declined marginally to $45.31 million or 3.07% when compared to the same quarter last year. Despite a decrease in cash flow MARTIN MIDSTREAM PARTNERS LP is still fairing well by exceeding its industry average cash flow growth rate of -49.32%.
- The debt-to-equity ratio is very high at 2.32 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, MMLP maintains a poor quick ratio of 0.80, which illustrates the inability to avoid short-term cash problems.
- You can view the full Martin Midstream Partners Ratings Report.
- MARPS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
- The gross profit margin for MARINE PETROLEUM TRUST is currently very high, coming in at 100.00%. MARPS has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, MARPS's net profit margin of 81.81% significantly outperformed against the industry.
- MARPS, with its decline in revenue, underperformed when compared the industry average of 24.6%. Since the same quarter one year prior, revenues fell by 38.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 46.60%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 47.05% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- MARINE PETROLEUM TRUST's earnings per share declined by 47.0% 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 two years. During the past fiscal year, MARINE PETROLEUM TRUST reported lower earnings of $0.94 versus $1.41 in the prior year.
- You can view the full Marine Petroleum Ratings Report.
- Our dividend calendar.