TheStreet Ratings’ stock model projects a stock’s total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.
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.” Entergy Dividend Yield: 4.50% Entergy (NYSE: ETR) shares currently have a dividend yield of 4.50%. Entergy Corporation, together with its subsidiaries, engages in the generation and distribution of electricity in the United States. It operates in two segments, Utility and Entergy Wholesale Commodities. The average volume for Entergy has been 1,483,000 shares per day over the past 30 days. Entergy has a market cap of $13.4 billion and is part of the utilities industry. Shares are up 10.5% 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 Entergy as a buy. Among the primary strengths of the company is its expanding profit margins over time. We feel its strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- 35.29% is the gross profit margin for ENTERGY CORP which we consider to be strong. 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 9.01% trails the industry average.
- ENTERGY CORP’s earnings per share declined by 22.4% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, ENTERGY CORP swung to a loss, reporting -$1.00 versus $5.22 in the prior year. This year, the market expects an improvement in earnings ($5.07 versus -$1.00).
- ETR, with its decline in revenue, slightly underperformed the industry average of 7.8%. Since the same quarter one year prior, revenues fell by 10.6%. Weakness in the company’s revenue seems to have hurt the bottom line, decreasing earnings per share.
- ETR is off 5.81% from its price level of one year ago, reflecting a combination of (a) the general market trend and (b) the company’s own weaknesses, including its lower earnings per share compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company’s fundamentals that would cause a continuation of last year’s decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- Net operating cash flow has decreased to $532.82 million or 12.78% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, ENTERGY CORP has marginally lower results.
- You can view the full Entergy Ratings Report.
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