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." Goldman Sachs BDC Dividend Yield: 9.00% Goldman Sachs BDC (NYSE: GSBD) shares currently have a dividend yield of 9.00%. Goldman Sachs BDC, Inc. is a business development company specializing in middle market and mezzanine investment in private companies. The average volume for Goldman Sachs BDC has been 105,000 shares per day over the past 30 days. Goldman Sachs BDC has a market cap of $726.2 million and is part of the real estate industry. Shares are up 5.6% 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 Goldman Sachs BDC as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and weak operating cash flow. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 13.7%. Since the same quarter one year prior, revenues rose by 18.9%. 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 GOLDMAN SACHS BDC INC is currently very high, coming in at 77.36%. 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 17.23% trails the industry average.
- When compared to other companies in the Capital Markets industry and the overall market, GOLDMAN SACHS BDC INC's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$3.57 million or 114.11% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The share price of GOLDMAN SACHS BDC INC has not done very well: it is down 17.22% 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.
- You can view the full Goldman Sachs BDC Ratings Report.
- 36.15% is the gross profit margin for ENABLE MIDSTREAM PARTNERS LP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 16.89% significantly outperformed against the industry average.
- The current debt-to-equity ratio, 0.39, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 1.00 is somewhat weak and could be cause for future problems.
- 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. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ENABLE MIDSTREAM PARTNERS LP's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Net operating cash flow has decreased to $117.00 million or 37.76% when compared to the same quarter last year. Despite a decrease in cash flow ENABLE MIDSTREAM PARTNERS LP is still fairing well by exceeding its industry average cash flow growth rate of -49.98%.
- You can view the full Enable Midstream Partners Ratings Report.
- The revenue growth came in higher than the industry average of 24.0%. Since the same quarter one year prior, revenues slightly increased by 2.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, NAVIOS MARITIME ACQUISITION's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- The gross profit margin for NAVIOS MARITIME ACQUISITION is currently very high, coming in at 97.43%. Regardless of NNA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NNA's net profit margin of 29.55% significantly outperformed against the industry.
- The debt-to-equity ratio is very high at 2.09 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, NNA's quick ratio is somewhat strong at 1.07, demonstrating the ability to handle short-term liquidity needs.
- Net operating cash flow has decreased to $26.98 million or 20.90% when compared to the same quarter last year. Despite a decrease in cash flow NAVIOS MARITIME ACQUISITION is still fairing well by exceeding its industry average cash flow growth rate of -49.98%.
- You can view the full Navios Maritime Acquisition Ratings Report.
- Our dividend calendar.