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." Manulife Financial Dividend Yield: 4.30% Manulife Financial (NYSE: MFC) shares currently have a dividend yield of 4.30%. Manulife Financial Corporation, together with its subsidiaries, provides financial advice, insurance, and wealth and asset management solutions for individuals, groups, and institutions in Asia, Canada, and the United States. The company has a P/E ratio of 14.45. The average volume for Manulife Financial has been 2,306,800 shares per day over the past 30 days. Manulife Financial has a market cap of $26.5 billion and is part of the insurance industry. Shares are down 8.7% 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 Manulife Financial as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations and increase in net income. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 15.6%. Since the same quarter one year prior, revenues rose by 38.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Although MFC's debt-to-equity ratio of 0.29 is very low, it is currently higher than that of the industry average.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Insurance industry. The net income increased by 44.5% when compared to the same quarter one year prior, rising from $723.00 million to $1,045.00 million.
- Net operating cash flow has increased to $2,701.00 million or 30.73% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -16.84%.
- You can view the full Manulife Financial Ratings Report.