3 Hold-Rated Dividend Stocks: STO, TGP, HCLP
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: 5.60%
(NYSE:
) shares currently have a dividend yield of 5.60%.
Statoil ASA, an integrated energy company, is engaged in the exploration, production, transportation, refining, and marketing of petroleum and petroleum-derived products in Norway and internationally. The company has a P/E ratio of 5.60.
The average volume for Statoil ASA has been 3,266,500 shares per day over the past 30 days. Statoil ASA has a market cap of $54.0 billion and is part of the energy industry. Shares are down 2.9% year-to-date as of the close of trading on Thursday.
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TheStreet Ratings rates
Statoil ASA
as a
. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.
Highlights from the ratings report include:
- The current debt-to-equity ratio, 0.54, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.26, which illustrates the ability to avoid short-term cash problems.
- 40.18% is the gross profit margin for STATOIL ASA which we consider to be strong. Regardless of STO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, STO's net profit margin of -19.19% significantly underperformed when compared to the industry average.
- Net operating cash flow has decreased to $1,513.02 million or 33.51% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, STATOIL ASA's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full Statoil ASA Ratings Report.
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Dividend Yield: 7.90%
(NYSE:
) shares currently have a dividend yield of 7.90%.
Teekay LNG Partners L.P. provides marine transportation services for liquefied natural gas (LNG), liquefied petroleum gas (LPG), and crude oil worldwide. The company has a P/E ratio of 14.37.
The average volume for Teekay LNG Partners has been 321,000 shares per day over the past 30 days. Teekay LNG Partners has a market cap of $2.8 billion and is part of the transportation industry. Shares are down 18.3% year-to-date as of the close of trading on Thursday.
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TheStreet Ratings rates
Teekay LNG Partners
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 generally higher debt management risk, disappointing return on equity and weak operating cash flow.
Highlights from the ratings report include:
- The gross profit margin for TEEKAY LNG PARTNERS LP is currently very high, coming in at 75.77%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 33.17% significantly outperformed against the industry average.
- Despite the weak revenue results, TGP has outperformed against the industry average of 19.6%. Since the same quarter one year prior, revenues slightly dropped by 5.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- TEEKAY LNG PARTNERS LP's earnings per share declined by 40.7% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, TEEKAY LNG PARTNERS LP reported lower earnings of $2.30 versus $2.49 in the prior year. This year, the market expects an improvement in earnings ($2.33 versus $2.30).
- The debt-to-equity ratio of 1.29 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, TGP has a quick ratio of 0.59, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TEEKAY LNG PARTNERS LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full Teekay LNG Partners Ratings Report.
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Dividend Yield: 7.60%
(NYSE:
) shares currently have a dividend yield of 7.60%.
Hi-Crush Partners LP produces and supplies monocrystalline sand in the United States. The monocrystalline sand is a mineral that is used as a proppant to enhance the recovery rates of hydrocarbons from oil and natural gas wells. The company has a P/E ratio of 11.79.
The average volume for Hi-Crush Partners has been 426,900 shares per day over the past 30 days. Hi-Crush Partners has a market cap of $824.8 million and is part of the metals & mining industry. Shares are up 12.8% year-to-date as of the close of trading on Thursday.
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TheStreet Ratings rates
Hi-Crush Partners
as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and generally higher debt management risk.
Highlights from the ratings report include:
- HCLP's very impressive revenue growth greatly exceeded the industry average of 18.9%. Since the same quarter one year prior, revenues leaped by 104.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- HI-CRUSH PARTNERS LP has improved earnings per share by 34.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, HI-CRUSH PARTNERS LP increased its bottom line by earning $2.92 versus $2.08 in the prior year. This year, the market expects an improvement in earnings ($3.52 versus $2.92).
- 37.08% is the gross profit margin for HI-CRUSH PARTNERS LP which we consider to be strong. Regardless of HCLP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HCLP's net profit margin of 29.12% significantly outperformed against the industry.
- HCLP has underperformed the S&P 500 Index, declining 12.02% 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.
- The debt-to-equity ratio of 1.14 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, HCLP has managed to keep a strong quick ratio of 1.66, which demonstrates the ability to cover short-term cash needs.
- You can view the full Hi-Crush Partners Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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