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."Liberty Property Dividend Yield: 4.80% Liberty Property (NYSE: LPT) shares currently have a dividend yield of 4.80%. Liberty Property Trust is a publicly owned real estate investment holding trust. Through its subsidiary, it provides leasing, property management, development, acquisition, and other tenant-related services for a portfolio of industrial and office properties. The company has a P/E ratio of 22.06. The average volume for Liberty Property has been 978,200 shares per day over the past 30 days. Liberty Property has a market cap of $5.8 billion and is part of the real estate industry. Shares are up 27.5% year-to-date as of the close of trading on Wednesday. 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 Liberty Property as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income, reasonable valuation levels, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results. 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. 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.
- 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 86.0% when compared to the same quarter one year prior, rising from $30.95 million to $57.55 million.
- 45.95% is the gross profit margin for LIBERTY PROPERTY TRUST 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 28.82% trails the industry average.
- Net operating cash flow has slightly increased to $96.81 million or 7.59% when compared to the same quarter last year. Despite an increase in cash flow, LIBERTY PROPERTY TRUST's average is still marginally south of the industry average growth rate of 11.47%.
- You can view the full Liberty Property Ratings Report.
- The current debt-to-equity ratio, 0.42, is low and is below the industry average, implying that there has been successful management of debt levels.
- Net operating cash flow has significantly increased by 125.83% to $271.00 million when compared to the same quarter last year. In addition, PEMBINA PIPELINE CORP has also vastly surpassed the industry average cash flow growth rate of -49.95%.
- Despite the weak revenue results, PBA has outperformed against the industry average of 24.1%. Since the same quarter one year prior, revenues fell by 11.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The change in net income from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 15.0% when compared to the same quarter one year ago, dropping from $120.00 million to $102.00 million.
- The gross profit margin for PEMBINA PIPELINE CORP is currently lower than what is desirable, coming in at 29.50%. Regardless of PBA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, PBA's net profit margin of 10.02% compares favorably to the industry average.
- You can view the full Pembina Pipeline Ratings Report.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Commercial Banks industry average. The net income increased by 0.9% when compared to the same quarter one year prior, going from $47.13 million to $47.57 million.
- Net operating cash flow has significantly increased by 276.04% to $42.84 million when compared to the same quarter last year. In addition, UMPQUA HOLDINGS CORP has also vastly surpassed the industry average cash flow growth rate of -155.62%.
- UMPQUA HOLDINGS CORP'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 two years. We feel that this trend should continue. During the past fiscal year, UMPQUA HOLDINGS CORP increased its bottom line by earning $1.01 versus $0.76 in the prior year. This year, the market expects an improvement in earnings ($1.14 versus $1.01).
- The gross profit margin for UMPQUA HOLDINGS CORP is currently very high, coming in at 92.43%. 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 16.98% trails the industry average.
- UMPQ, with its decline in revenue, slightly underperformed the industry average of 0.0%. Since the same quarter one year prior, revenues slightly dropped by 4.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full Umpqua Holdings Ratings Report.
- Our dividend calendar.