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."NuStar Energy Dividend Yield: 9.00% NuStar Energy (NYSE: NS) shares currently have a dividend yield of 9.00%. NuStar Energy L.P. engages in the terminalling, storage, and marketing of petroleum products; and transportation of petroleum products and anhydrous ammonia. It operates through three segments: Pipeline, Storage, and Fuels Marketing. The company has a P/E ratio of 20.26. The average volume for NuStar Energy has been 391,400 shares per day over the past 30 days. NuStar Energy has a market cap of $3.8 billion and is part of the energy industry. Shares are up 20.9% 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 NuStar Energy as a buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated. Highlights from the ratings report include:
- 42.27% is the gross profit margin for NUSTAR ENERGY LP which we consider to be strong. It has increased significantly from the same period last year. Along with this, the net profit margin of 14.14% significantly outperformed against the industry average.
- NS, with its decline in revenue, slightly underperformed the industry average of 24.0%. Since the same quarter one year prior, revenues fell by 26.9%. Weakness in the company's revenue seems to have hurt the 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 significantly decreased by 55.1% when compared to the same quarter one year ago, falling from $127.90 million to $57.40 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, NUSTAR ENERGY LP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- You can view the full NuStar Energy Ratings Report.
- CHUNGHWA TELECOM LTD has improved earnings per share by 35.7% 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 year. We feel that this trend should continue. During the past fiscal year, CHUNGHWA TELECOM LTD increased its bottom line by earning $1.68 versus $1.57 in the prior year. This year, the market expects an improvement in earnings ($1.77 versus $1.68).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Diversified Telecommunication Services industry average. The net income increased by 34.7% when compared to the same quarter one year prior, rising from $218.39 million to $294.13 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 19.9%. Since the same quarter one year prior, revenues rose by 14.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- CHT's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.07, which illustrates the ability to avoid short-term cash problems.
- 45.96% is the gross profit margin for CHUNGHWA TELECOM LTD which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.25% is above that of the industry average.
- You can view the full Chunghwa Telecom Ratings Report.
- T's revenue growth has slightly outpaced the industry average of 19.9%. Since the same quarter one year prior, revenues rose by 24.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Diversified Telecommunication Services industry average. The net income increased by 16.5% when compared to the same quarter one year prior, going from $3,263.00 million to $3,803.00 million.
- Net operating cash flow has increased to $7,900.00 million or 17.24% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.30%.
- AT&T INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AT&T INC increased its bottom line by earning $2.37 versus $1.23 in the prior year. This year, the market expects an improvement in earnings ($2.87 versus $2.37).
- The gross profit margin for AT&T INC is rather high; currently it is at 55.33%. Regardless of T's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.38% trails the industry average.
- You can view the full AT&T Ratings Report.
- Our dividend calendar.