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 "Sell."GasLog Partners Dividend Yield: 9.80% GasLog Partners (NYSE: GLOP) shares currently have a dividend yield of 9.80%. GasLog Partners LP acquires, owns, and operates liquefied natural gas (LNG) carriers. The company provides LNG transportation services under long-term charters worldwide. As of February 16, 2016, it had a fleet of eight LNG carriers. The company was founded in 2014 and is based in Monaco. The company has a P/E ratio of 7.61. The average volume for GasLog Partners has been 119,100 shares per day over the past 30 days. GasLog Partners has a market cap of $616.1 million and is part of the energy industry. Shares are up 38.3% 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 GasLog Partners as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share. Highlights from the ratings report include:
- The debt-to-equity ratio of 1.26 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.17, which clearly demonstrates the inability to cover short-term cash needs.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, GLOP has underperformed the S&P 500 Index, declining 10.50% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- GASLOG PARTNERS LP's earnings per share declined by 7.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, GASLOG PARTNERS LP increased its bottom line by earning $2.41 versus $1.51 in the prior year. For the next year, the market is expecting a contraction of 11.0% in earnings ($2.15 versus $2.41).
- The change in net income 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 has decreased by 3.0% when compared to the same quarter one year ago, dropping from $16.69 million to $16.19 million.
- The gross profit margin for GASLOG PARTNERS LP is currently very high, coming in at 75.47%. Regardless of GLOP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GLOP's net profit margin of 32.80% significantly outperformed against the industry.
- You can view the full GasLog Partners Ratings Report.
- SPP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 37.11%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
- 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SANCHEZ PRODUCTION PARTNERS's return on equity significantly trails that of both the industry average and the S&P 500.
- SPP's debt-to-equity ratio of 0.78 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 1.35 is sturdy.
- SANCHEZ PRODUCTION PARTNERS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, SANCHEZ PRODUCTION PARTNERS swung to a loss, reporting -$52.70 versus $3.20 in the prior year.
- 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 105.9% when compared to the same quarter one year prior, rising from -$89.99 million to $5.28 million.
- You can view the full Sanchez Production Partners Ratings Report.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Chemicals industry. The net income has significantly decreased by 120.7% when compared to the same quarter one year ago, falling from $18.40 million to -$3.80 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Chemicals industry and the overall market, KRONOS WORLDWIDE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for KRONOS WORLDWIDE INC is rather low; currently it is at 15.89%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.19% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$15.30 million or 53.00% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 54.30%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 118.75% 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.
- You can view the full Kronos Worldwide Ratings Report.
- Our dividend calendar.