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."America First Multifamily Investors Dividend Yield: 8.80% America First Multifamily Investors (NASDAQ: ATAX) shares currently have a dividend yield of 8.80%. America First Multifamily Investors, L.P. acquires, holds, sells, and deals in a portfolio of mortgage revenue bonds that have been issued to provide construction or permanent financing for multifamily and student housing, and commercial properties. The company has a P/E ratio of 16.65. The average volume for America First Multifamily Investors has been 128,200 shares per day over the past 30 days. America First Multifamily Investors has a market cap of $341.0 million and is part of the real estate industry. Shares are up 11.9% year-to-date as of the close of trading on Friday. 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 America First Multifamily Investors as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 14.9%. Since the same quarter one year prior, revenues rose by 19.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- The gross profit margin for AMERICA FIRST MULTIFAMILY-LP is currently very high, coming in at 82.34%. 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 16.96% trails the industry average.
- Net operating cash flow has increased to $4.87 million or 16.63% when compared to the same quarter last year. Despite an increase in cash flow of 16.63%, AMERICA FIRST MULTIFAMILY-LP is still growing at a significantly lower rate than the industry average of 173.07%.
- AMERICA FIRST MULTIFAMILY-LP reported flat earnings per share in the most recent quarter. 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, AMERICA FIRST MULTIFAMILY-LP increased its bottom line by earning $0.35 versus $0.25 in the prior year. For the next year, the market is expecting a contraction of 14.3% in earnings ($0.30 versus $0.35).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Thrifts & Mortgage Finance industry and the overall market, AMERICA FIRST MULTIFAMILY-LP's return on equity is below that of both the industry average and the S&P 500.
- You can view the full America First Multifamily Investors Ratings Report.
- 42.62% is the gross profit margin for ALLIANCE RESOURCE PTNRS -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 18.83% significantly outperformed against the industry average.
- ALLIANCE RESOURCE PTNRS -LP has improved earnings per share by 7.9% 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, ALLIANCE RESOURCE PTNRS -LP reported lower earnings of $2.10 versus $4.78 in the prior year. This year, the market expects an improvement in earnings ($2.34 versus $2.10).
- Net operating cash flow has decreased to $131.75 million or 25.67% when compared to the same quarter last year. Despite a decrease in cash flow ALLIANCE RESOURCE PTNRS -LP is still fairing well by exceeding its industry average cash flow growth rate of -49.98%.
- ARLP's debt-to-equity ratio of 0.98 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. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.24 is very low and demonstrates very weak liquidity.
- You can view the full Alliance Resource Partners Ratings Report.
- MN, with its decline in revenue, slightly underperformed the industry average of 13.2%. Since the same quarter one year prior, revenues fell by 22.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- MANNING & NAPIER INC's earnings per share declined by 26.1% 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, MANNING & NAPIER INC increased its bottom line by earning $0.87 versus $0.67 in the prior year. For the next year, the market is expecting a contraction of 15.4% in earnings ($0.74 versus $0.87).
- The share price of MANNING & NAPIER INC has not done very well: it is down 23.19% 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. 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.
- 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 Capital Markets industry. The net income has significantly decreased by 25.6% when compared to the same quarter one year ago, falling from $3.50 million to $2.61 million.
- The gross profit margin for MANNING & NAPIER INC is currently lower than what is desirable, coming in at 34.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.85% significantly trails the industry average.
- You can view the full Manning & Napier Ratings Report.
- Our dividend calendar.