3 Hold-Rated Dividend Stocks: MCC, NRP, EFC
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 or Stephanie Link.
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: 12.70%
(NYSE:
) shares currently have a dividend yield of 12.70%.
Medley Capital Corporation is a business development company. The fund seeks to invest in privately negotiated debt and equity securities of small and middle market companies. The company has a P/E ratio of 8.60.
The average volume for Medley Capital has been 761,900 shares per day over the past 30 days. Medley Capital has a market cap of $555.6 million and is part of the financial services industry. Shares are up 2.5% year-to-date as of the close of trading on Monday.
TheStreet Ratings rates
Medley Capital
as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.
Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 12.8%. Since the same quarter one year prior, revenues rose by 25.8%. 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.
- Net operating cash flow has increased to -$42.35 million or 22.43% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -6.01%.
- The gross profit margin for MEDLEY CAPITAL CORP is rather high; currently it is at 67.12%. Regardless of MCC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MCC's net profit margin of -45.96% significantly underperformed when compared to the industry average.
- 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 Capital Markets industry and the overall market on the basis of return on equity, MEDLEY CAPITAL CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 31.22%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 186.11% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- You can view the full Medley Capital Ratings Report.
Dividend Yield: 17.70%
(NYSE:
) shares currently have a dividend yield of 17.70%.
Natural Resource Partners L.P., through its subsidiaries, owns, manages, and leases mineral properties in the United States. The company has a P/E ratio of 8.44.
The average volume for Natural Resources Partners has been 726,300 shares per day over the past 30 days. Natural Resources Partners has a market cap of $969.7 million and is part of the metals & mining industry. Shares are down 15.9% year-to-date as of the close of trading on Monday.
TheStreet Ratings rates
Natural Resources Partners
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk.
Highlights from the ratings report include:
- NRP's very impressive revenue growth greatly exceeded the industry average of 18.7%. Since the same quarter one year prior, revenues leaped by 50.8%. 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 NATURAL RESOURCE PARTNERS LP is rather high; currently it is at 50.23%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, NRP's net profit margin of 6.93% compares favorably to the industry average.
- Net operating cash flow has declined marginally to $53.66 million or 6.77% when compared to the same quarter last year. Despite a decrease in cash flow of 6.77%, NATURAL RESOURCE PARTNERS LP is in line with the industry average cash flow growth rate of -12.58%.
- 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 81.6% when compared to the same quarter one year ago, falling from $46.98 million to $8.65 million.
- The debt-to-equity ratio is very high at 2.05 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, NRP maintains a poor quick ratio of 0.85, which illustrates the inability to avoid short-term cash problems.
- You can view the full Natural Resources Partners Ratings Report.
Dividend Yield: 12.70%
(NYSE:
) shares currently have a dividend yield of 12.70%.
Ellington Financial LLC, a specialty finance company, acquires and manages mortgage-related assets, including residential mortgage backed securities backed by prime jumbo, Alt-A, manufactured housing and subprime residential mortgage loans, and residential mortgage-backed securities. The company has a P/E ratio of 9.80.
The average volume for Ellington Financial has been 245,900 shares per day over the past 30 days. Ellington Financial has a market cap of $685.0 million and is part of the real estate industry. Shares are up 1.9% year-to-date as of the close of trading on Monday.
TheStreet Ratings rates
Ellington Financial
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. However, as a counter to these strengths, 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 revenue growth greatly exceeded the industry average of 12.8%. Since the same quarter one year prior, revenues rose by 25.6%. 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 ELLINGTON FINANCIAL LLC is currently very high, coming in at 75.49%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, EFC's net profit margin of 9.14% significantly trails the industry average.
- ELLINGTON FINANCIAL LLC 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, ELLINGTON FINANCIAL LLC reported lower earnings of $2.23 versus $3.46 in the prior year. This year, the market expects an improvement in earnings ($2.50 versus $2.23).
- 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 82.3% when compared to the same quarter one year ago, falling from $14.86 million to $2.64 million.
- 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. When compared to other companies in the Capital Markets industry and the overall market, ELLINGTON FINANCIAL LLC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Ellington Financial Ratings Report.
Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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