What To Hold: 3 Hold-Rated Dividend Stocks AIRI, SSW, RWT

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."

Air Industries Group

Dividend Yield: 7.10%

Air Industries Group

(AMEX:

AIRI

) shares currently have a dividend yield of 7.10%.

Air Industries Group, an aerospace and defense company, designs and manufactures structural parts and assemblies that focus on flight safety. The company operates through Complex Machining, Aero structures and Electronics, and Turbine Engine Components segments.

The average volume for Air Industries Group has been 6,400 shares per day over the past 30 days. Air Industries Group has a market cap of $63.8 million and is part of the aerospace/defense industry. Shares are down 20.1% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Air Industries Group

as a

hold

. Among the primary strengths of the company is its revenue growth. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 1.6%. Since the same quarter one year prior, revenues rose by 42.6%. 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.
  • AIR INDUSTRIES GROUP INC 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, AIR INDUSTRIES GROUP INC reported lower earnings of $0.11 versus $0.64 in the prior year. This year, the market expects an improvement in earnings ($0.19 versus $0.11).
  • The share price of AIR INDUSTRIES GROUP INC has not done very well: it is down 24.09% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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 gross profit margin for AIR INDUSTRIES GROUP INC is currently lower than what is desirable, coming in at 26.86%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -3.15% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$1.21 million or 162.02% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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Seaspan

Dividend Yield: 9.80%

Seaspan

(NYSE:

SSW

) shares currently have a dividend yield of 9.80%.

Seaspan Corporation operates as an independent charter owner and manager of containerships in Hong Kong. The company charters its containerships pursuant to long-term, fixed-rate time charters to various container liner companies. The company has a P/E ratio of 3.80.

The average volume for Seaspan has been 221,200 shares per day over the past 30 days. Seaspan has a market cap of $1.5 billion and is part of the transportation industry. Shares are down 15.1% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Seaspan

as a

hold

. 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 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 came in higher than the industry average of 15.4%. Since the same quarter one year prior, revenues rose by 14.5%. 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.
  • 47.33% is the gross profit margin for SEASPAN CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.62% trails the industry average.
  • SEASPAN 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SEASPAN CORP reported lower earnings of $0.78 versus $2.94 in the prior year. This year, the market expects an improvement in earnings ($1.07 versus $0.78).
  • 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 Marine industry and the overall market, SEASPAN CORP's return on equity is below that of both the industry average and the S&P 500.
  • 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 Marine industry. The net income has significantly decreased by 68.7% when compared to the same quarter one year ago, falling from $65.44 million to $20.49 million.

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Redwood

Dividend Yield: 8.80%

Redwood

(NYSE:

RWT

) shares currently have a dividend yield of 8.80%.

Redwood Trust, Inc., together with its subsidiaries, focuses on investing in mortgage-and other real estate-related assets; and engaging in residential and commercial mortgage banking activities in the United States. The company has a P/E ratio of 12.78.

The average volume for Redwood has been 566,100 shares per day over the past 30 days. Redwood has a market cap of $1.0 billion and is part of the real estate industry. Shares are down 34.5% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Redwood

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels 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 disappointing return on equity.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 0.2%. 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 REDWOOD TRUST INC is rather high; currently it is at 61.51%. Regardless of RWT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, RWT's net profit margin of 30.18% compares favorably to the industry average.
  • 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 significantly decreased by 57.5% when compared to the same quarter one year ago, falling from $45.10 million to $19.16 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, REDWOOD TRUST INC's return on equity is below that of both the industry average and the S&P 500.

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