3 Hold-Rated Dividend Stocks: CPLP, MTGE, TICC
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer
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 "Hold."
Dividend Yield: 9.60%
(NASDAQ:
) shares currently have a dividend yield of 9.60%.
Capital Product Partners L.P., a shipping company, provides marine transportation services in Greece. The company has a P/E ratio of 31.26.
The average volume for Capital Product Partners has been 585,200 shares per day over the past 30 days. Capital Product Partners has a market cap of $1.0 billion and is part of the transportation industry. Shares are up 17.6% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
Capital Product Partners
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 19.8%. Since the same quarter one year prior, revenues slightly increased by 5.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.66, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 3.66, which clearly demonstrates the ability to cover short-term cash needs.
- CAPITAL PRODUCT PARTNERS LP reported significant earnings per share improvement 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, CAPITAL PRODUCT PARTNERS LP reported lower earnings of $0.31 versus $0.99 in the prior year. This year, the market expects an improvement in earnings ($0.46 versus $0.31).
- CPLP has underperformed the S&P 500 Index, declining 10.53% from its price level of one year ago. 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.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CAPITAL PRODUCT PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Capital Product Partners Ratings Report.
American Capital Mortgage Investment
Dividend Yield: 14.10%
American Capital Mortgage Investment
(NASDAQ:
) shares currently have a dividend yield of 14.10%.
American Capital Mortgage Investment Corp. operates as a real estate investment trust (REIT) in the United States. The company has a P/E ratio of 6.02.
The average volume for American Capital Mortgage Investment has been 462,800 shares per day over the past 30 days. American Capital Mortgage Investment has a market cap of $942.5 million and is part of the real estate industry. Shares are down 4% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
American Capital Mortgage Investment
as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and attractive valuation levels. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
Highlights from the ratings report include:
- MTGE's very impressive revenue growth greatly exceeded the industry average of 9.9%. Since the same quarter one year prior, revenues leaped by 486.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, AMERICAN CAPITAL MTG INV CP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The gross profit margin for AMERICAN CAPITAL MTG INV CP is currently very high, coming in at 78.66%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, MTGE's net profit margin of 16.66% is significantly lower than the industry average.
- MTGE has underperformed the S&P 500 Index, declining 9.31% from its price level of one year ago. 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.
- You can view the full American Capital Mortgage Investment Ratings Report.
Dividend Yield: 14.40%
(NASDAQ:
) shares currently have a dividend yield of 14.40%.
TICC Capital Corp., a business development company, operates as a closed-end, non-diversified management investment company. The firm invests in both public and private companies. The company has a P/E ratio of 11.16.
The average volume for TICC Capital has been 487,500 shares per day over the past 30 days. TICC Capital has a market cap of $448.7 million and is part of the financial services industry. Shares are up 0.3% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
TICC Capital
as a
. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The gross profit margin for TICC CAPITAL CORP is currently very high, coming in at 73.07%. 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 -99.73% is in-line with the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 13.1%. Since the same quarter one year prior, revenues slightly dropped by 6.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- TICC CAPITAL CORP 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, TICC CAPITAL CORP swung to a loss, reporting -$0.05 versus $1.11 in the prior year. This year, the market expects an improvement in earnings ($1.08 versus -$0.05).
- 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 318.1% when compared to the same quarter one year ago, falling from $13.06 million to -$28.48 million.
- 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. Compared to other companies in the Capital Markets industry and the overall market, TICC CAPITAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full TICC Capital Ratings Report.
Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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