3 Hold-Rated Dividend Stocks: MPW, VZ, WYNN
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: 6.10%
(NYSE:
) shares currently have a dividend yield of 6.10%.
Medical Properties Trust, Inc. operates as a real estate investment trust (REIT) in the United States. It acquires, develops, and invests in healthcare facilities; and leases healthcare facilities to healthcare operating companies and healthcare providers. The company has a P/E ratio of 49.97.
The average volume for Medical Properties has been 2,414,400 shares per day over the past 30 days. Medical Properties has a market cap of $3.0 billion and is part of the real estate industry. Shares are up 7.3% year-to-date as of the close of trading on Wednesday.
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TheStreet Ratings rates
Medical Properties
as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and disappointing return on equity.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 10.0%. Since the same quarter one year prior, revenues rose by 20.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- MEDICAL PROPERTIES TRUST reported flat earnings per share in the most recent quarter. 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, MEDICAL PROPERTIES TRUST reported lower earnings of $0.28 versus $0.58 in the prior year. This year, the market expects an improvement in earnings ($0.92 versus $0.28).
- 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 Real Estate Investment Trusts (REITs) industry. The net income has decreased by 16.2% when compared to the same quarter one year ago, dropping from $17.84 million to $14.95 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, MEDICAL PROPERTIES TRUST underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full Medical Properties Ratings Report.
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Dividend Yield: 4.50%
(NYSE:
) shares currently have a dividend yield of 4.50%.
Verizon Communications Inc., through its subsidiaries, provides communications, information, and entertainment products and services to consumers, businesses, and governmental agencies worldwide. The company has a P/E ratio of 20.23.
The average volume for Verizon Communications has been 16,749,200 shares per day over the past 30 days. Verizon Communications has a market cap of $203.4 billion and is part of the telecommunications industry. Shares are up 5.9% year-to-date as of the close of trading on Wednesday.
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TheStreet Ratings rates
Verizon Communications
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and weak operating cash flow.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 6.8%. 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 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 Diversified Telecommunication Services industry and the overall market, VERIZON COMMUNICATIONS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for VERIZON COMMUNICATIONS INC is rather high; currently it is at 56.61%. Regardless of VZ's high profit margin, it has managed to decrease from the same period last year.
- The debt-to-equity ratio is very high at 9.21 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, VZ maintains a poor quick ratio of 0.90, which illustrates the inability to avoid short-term cash problems.
- Net operating cash flow has decreased to $7,474.00 million or 28.34% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, VERIZON COMMUNICATIONS INC has marginally lower results.
- You can view the full Verizon Communications Ratings Report.
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Dividend Yield: 4.80%
(NASDAQ:
) shares currently have a dividend yield of 4.80%.
Wynn Resorts, Limited, together with its subsidiaries, develops, owns, and operates destination casino resorts. It operates in two segments, Macau Operations and Las Vegas Operations. The company operates Wynn Macau and Encore at Wynn Macau resort located in the People's Republic of China. The company has a P/E ratio of 17.35.
The average volume for Wynn Resorts has been 1,993,100 shares per day over the past 30 days. Wynn Resorts has a market cap of $12.6 billion and is part of the leisure industry. Shares are down 17.4% year-to-date as of the close of trading on Wednesday.
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TheStreet Ratings rates
Wynn Resorts
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 unimpressive growth in net income, weak operating cash flow and feeble growth in the company's earnings per share.
Highlights from the ratings report include:
- 38.51% is the gross profit margin for WYNN RESORTS LTD which we consider to be strong. Regardless of WYNN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.60% trails the industry average.
- WYNN, with its decline in revenue, underperformed when compared the industry average of 7.5%. Since the same quarter one year prior, revenues fell by 25.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 47.27%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 49.04% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- 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 Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 48.9% when compared to the same quarter one year ago, falling from $213.88 million to $109.35 million.
- Net operating cash flow has significantly decreased to $124.19 million or 68.58% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full Wynn Resorts Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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