3 Hold-Rated Dividend Stocks: SEMG, CPA, OGE

These 3 dividend stocks are rated a Hold by TheStreet
By TheStreet Wire ,

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."

Semgroup

Dividend Yield: 5.10%

Semgroup

(NYSE:

SEMG

) shares currently have a dividend yield of 5.10%.

SemGroup Corporation, together with its subsidiaries, provides gathering, transportation, storage, distribution, marketing, and other midstream services. It operates through six segments: Crude, SemStream, SemLogistics, SemCAMS, SemMexico, and SemGas. The company has a P/E ratio of 41.23.

The average volume for Semgroup has been 519,600 shares per day over the past 30 days. Semgroup has a market cap of $1.6 billion and is part of the energy industry. Shares are down 48.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Semgroup

as a

hold

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and poor profit margins.

Highlights from the ratings report include:

  • Net operating cash flow has increased to $64.09 million or 27.29% when compared to the same quarter last year. In addition, SEMGROUP CORP has also vastly surpassed the industry average cash flow growth rate of -25.83%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 36.8%. Since the same quarter one year prior, revenues fell by 33.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 80.7% when compared to the same quarter one year ago, falling from $25.26 million to $4.87 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 56.99%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 81.35% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, SEMG is still more expensive than most of the other companies in its industry.

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Copa Holdings

Dividend Yield: 6.40%

Copa Holdings

(NYSE:

CPA

) shares currently have a dividend yield of 6.40%.

Copa Holdings, S.A. provides airline passenger and cargo services in Latin America. It offers services within Colombia; and international flights from various cities in Colombia to Panama, Venezuela, Ecuador, Mexico, Cuba, Guatemala, and Costa Rica. The company has a P/E ratio of 7.21.

The average volume for Copa Holdings has been 842,300 shares per day over the past 30 days. Copa Holdings has a market cap of $1.7 billion and is part of the transportation industry. Shares are down 49% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Copa Holdings

as a

hold

. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • The current debt-to-equity ratio, 0.60, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.81 is somewhat weak and could be cause for future problems.
  • CPA, with its decline in revenue, underperformed when compared the industry average of 5.6%. Since the same quarter one year prior, revenues fell by 17.5%. 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 53.35%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 90.60% 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.
  • 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. In comparison to the other companies in the Airlines industry and the overall market, COPA HOLDINGS SA's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The gross profit margin for COPA HOLDINGS SA is rather low; currently it is at 15.72%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.13% significantly trails the industry average.

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OGE Energy

Dividend Yield: 4.30%

OGE Energy

(NYSE:

OGE

) shares currently have a dividend yield of 4.30%.

OGE Energy Corp., together with its subsidiaries, operates as an energy and energy services provider that offers physical delivery and related services for electricity and natural gas primarily in the south central United States. The company has a P/E ratio of 17.13.

The average volume for OGE Energy has been 1,203,200 shares per day over the past 30 days. OGE Energy has a market cap of $5.2 billion and is part of the utilities industry. Shares are down 27.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

OGE Energy

as a

hold

. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. 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:

  • Net operating cash flow has slightly increased to $303.30 million or 6.53% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -7.98%.
  • 45.67% is the gross profit margin for OGE ENERGY 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 15.44% trails the industry average.
  • The debt-to-equity ratio is somewhat low, currently at 0.82, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.46 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 29.00%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 41.48% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, OGE is still more expensive than most of the other companies in its industry.
  • 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. When compared to other companies in the Electric Utilities industry and the overall market, OGE ENERGY CORP's return on equity is below that of both the industry average and the S&P 500.

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