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."Banco Santander (Brasil Dividend Yield: 7.20% Banco Santander (Brasil (NYSE: BSBR) shares currently have a dividend yield of 7.20%. Banco Santander (Brasil) S.A. provides banking products and services in Brazil and internationally. It operates in two segments, Commercial Banking and Global Wholesale Banking. The company has a P/E ratio of 0.02. The average volume for Banco Santander (Brasil has been 1,406,100 shares per day over the past 30 days. Banco Santander (Brasil has a market cap of $46.0 billion and is part of the banking industry. Shares are up 52.4% year-to-date as of the close of trading on Tuesday. 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 Banco Santander (Brasil as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations, expanding profit margins and increase in net income. 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:
- BSBR's very impressive revenue growth greatly exceeded the industry average of 1.3%. Since the same quarter one year prior, revenues leaped by 81.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
- Net operating cash flow has significantly increased by 154.60% to $815.85 million when compared to the same quarter last year. In addition, BANCO SANTANDER BRASIL -ADR has also vastly surpassed the industry average cash flow growth rate of -47.56%.
- 49.64% is the gross profit margin for BANCO SANTANDER BRASIL -ADR which we consider to be strong. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, BSBR's net profit margin of 8.06% significantly trails the industry average.
- The net income growth from the same quarter one year ago has exceeded that of the Commercial Banks industry average, but is less than that of the S&P 500. The net income increased by 0.4% when compared to the same quarter one year prior, going from $506.51 million to $508.36 million.
- You can view the full Banco Santander (Brasil Ratings Report.
- The revenue growth came in higher than the industry average of 13.0%. Since the same quarter one year prior, revenues slightly increased by 7.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- HIHO 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. Along with this, the company maintains a quick ratio of 2.65, which clearly demonstrates the ability to cover short-term cash needs.
- HIGHWAY HOLDINGS LTD reported significant earnings per share improvement 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 two years. During the past fiscal year, HIGHWAY HOLDINGS LTD increased its bottom line by earning $0.33 versus $0.31 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 Machinery industry. The net income increased by 33.5% when compared to the same quarter one year prior, rising from $0.16 million to $0.22 million.
- You can view the full Highway Holdings Ratings Report.
- NVEC 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. Along with this, the company maintains a quick ratio of 18.55, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for NVE CORP is currently very high, coming in at 79.56%. Regardless of NVEC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NVEC's net profit margin of 42.63% significantly outperformed against the industry.
- NVEC, with its decline in revenue, underperformed when compared the industry average of 5.9%. Since the same quarter one year prior, revenues fell by 19.4%. 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 Semiconductors & Semiconductor Equipment industry average, but is less than that of the S&P 500. The net income has significantly decreased by 29.0% when compared to the same quarter one year ago, falling from $3.66 million to $2.60 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 26.34%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 28.00% compared to the year-earlier quarter. Looking ahead, the stock's sharp decline over the past year may have been what was needed in order to bring its value into alignment with its fundamentals and others in its industry.
- You can view the full NVE Ratings Report.
- Our dividend calendar.