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 "Hold."Enbridge Energy Partners Dividend Yield: 9.80% Enbridge Energy Partners (NYSE: EEP) shares currently have a dividend yield of 9.80%. Enbridge Energy Partners, L.P. owns and operates a diversified portfolio of crude oil and natural gas transportation systems in the United States. It operates through two segments, Liquids and Natural Gas. The company has a P/E ratio of 395.50. The average volume for Enbridge Energy Partners has been 1,123,600 shares per day over the past 30 days. Enbridge Energy Partners has a market cap of $10.2 billion and is part of the energy industry. Shares are down 1.1% 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 Enbridge Energy Partners as a hold. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including generally higher debt management risk, disappointing return on equity and weak operating cash flow. Highlights from the ratings report include:
- The gross profit margin for ENBRIDGE ENERGY PRTNRS -LP is rather high; currently it is at 60.36%. It has increased significantly from the same period last year. Along with this, the net profit margin of 9.75% is above that of the industry average.
- EEP, with its decline in revenue, slightly underperformed the industry average of 24.0%. Since the same quarter one year prior, revenues fell by 25.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has decreased to $266.30 million or 30.01% when compared to the same quarter last year. Despite a decrease in cash flow ENBRIDGE ENERGY PRTNRS -LP is still fairing well by exceeding its industry average cash flow growth rate of -49.98%.
- Currently the debt-to-equity ratio of 1.75 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.22, which clearly demonstrates the inability to cover short-term cash needs.
- You can view the full Enbridge Energy Partners Ratings Report.
- FI's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.85, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for FRANK'S INTL NV is rather high; currently it is at 55.61%. Regardless of FI's high profit margin, it has managed to decrease from the same period last year.
- FI, with its decline in revenue, underperformed when compared the industry average of 21.6%. Since the same quarter one year prior, revenues fell by 44.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The share price of FRANK'S INTL NV has not done very well: it is down 14.73% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- FRANK'S INTL NV has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, FRANK'S INTL NV reported lower earnings of $0.50 versus $1.03 in the prior year. For the next year, the market is expecting a contraction of 110.0% in earnings (-$0.05 versus $0.50).
- You can view the full Frank's International Ratings Report.
- The revenue growth greatly exceeded the industry average of 13.9%. Since the same quarter one year prior, revenues rose by 35.1%. 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 gross profit margin for PATTERN ENERGY GROUP INC is rather high; currently it is at 63.21%. 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 -27.00% is in-line with the industry average.
- PATTERN ENERGY GROUP INC's earnings per share declined by 6.7% in the most recent quarter compared to the same quarter a year ago. 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, PATTERN ENERGY GROUP INC continued to lose money by earning -$0.46 versus -$0.55 in the prior year. This year, the market expects an improvement in earnings (-$0.27 versus -$0.46).
- 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. Compared to other companies in the Independent Power Producers & Energy Traders industry and the overall market on the basis of return on equity, PATTERN ENERGY GROUP INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Although PEGI's debt-to-equity ratio of 2.31 is very high, it is currently less than that of the industry average. Along with this, the company manages to maintain a quick ratio of 0.27, which clearly demonstrates the inability to cover short-term cash needs.
- You can view the full Pattern Energy Group Ratings Report.
- Our dividend calendar.