Hold-Rated Dividend Stocks In The Top 5: CWH, CY, OZM, ARCP, PM
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 and 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 5 stocks with substantial yields, that ultimately, we have rated "Hold." CommonWealth REIT (NYSE: CWH) shares currently have a dividend yield of 4.10%. CommonWealth REIT is a real estate investment trust launched and managed by Reit Management & Research LLC. The fund invests in the real estate markets of the United States. It seeks to invest in office buildings, industrial buildings, and leased industrial land. The company has a P/E ratio of 63.61. The average volume for CommonWealth REIT has been 888,800 shares per day over the past 30 days. CommonWealth REIT has a market cap of $2.9 billion and is part of the real estate industry. Shares are up 53.7% year to date as of the close of trading on Monday. TheStreet Ratings rates CommonWealth REIT as a hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, notable return on equity and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including poor profit margins and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- Net operating cash flow has increased to $52.96 million or 11.00% when compared to the same quarter last year.
- 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.
- The net income has significantly decreased by 1327.8% when compared to the same quarter one year ago, falling from $17.62 million to -$216.32 million.
- COMMONWEALTH REIT 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. Stable Earnings per share over the past year indicate the company has sound management over its earnings and share float. During the past fiscal year, COMMONWEALTH REIT reported lower earnings of $0.18 versus $0.19 in the prior year.
- The gross profit margin for COMMONWEALTH REIT is rather low; currently it is at 19.32%. It has decreased significantly from the same period last year.
- You can view the full CommonWealth REIT Ratings Report.
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