What To Hold: 3 Hold-Rated Dividend Stocks ALDW, IRT, HCAP
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: 14.90%
(NYSE:
) shares currently have a dividend yield of 14.90%.
Alon USA Partners, LP refines and markets petroleum products primarily in the South Central and Southwestern regions of the United States. The company owns and operates a crude oil refinery in Big Spring, Texas with crude oil throughput capacity of 73,000 barrels per day. The company has a P/E ratio of 6.93.
The average volume for Alon USA Partners has been 247,800 shares per day over the past 30 days. Alon USA Partners has a market cap of $1.2 billion and is part of the energy industry. Shares are up 42.2% year-to-date as of the close of trading on Friday.
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TheStreet Ratings rates
Alon USA Partners
as a
. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and attractive valuation levels. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
Highlights from the ratings report include:
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 211.9% when compared to the same quarter one year prior, rising from $13.50 million to $42.10 million.
- Net operating cash flow has remained constant at $57.13 million with no significant change when compared to the same quarter last year. Along with maintaining stable cash flow from operations, the firm exceeded the industry average cash flow growth rate of -13.05%.
- 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 Oil, Gas & Consumable Fuels industry and the overall market, ALON USA PARTNERS LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for ALON USA PARTNERS LP is currently extremely low, coming in at 9.54%. Regardless of ALDW's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, ALDW's net profit margin of 5.26% compares favorably to the industry average.
- You can view the full Alon USA Partners Ratings Report.
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Dividend Yield: 7.70%
(AMEX:
) shares currently have a dividend yield of 7.70%.
Independence Realty Trust, Inc is an equity real estate investment trust launched by RAIT Financial Trust. It is managed by Independence Realty Advisors, LLC. The fund invests in the real estate markets of the United States. It makes investments in apartment properties to create its portfolio. The company has a P/E ratio of 67.07.
The average volume for Independence Realty has been 121,900 shares per day over the past 30 days. Independence Realty has a market cap of $299.5 million and is part of the real estate industry. Shares are unchanged year-to-date as of the close of trading on Friday.
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TheStreet Ratings rates
Independence Realty
as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and feeble growth in the company's earnings per share.
Highlights from the ratings report include:
- IRT's very impressive revenue growth greatly exceeded the industry average of 10.1%. Since the same quarter one year prior, revenues leaped by 183.8%. 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.
- Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, INDEPENDENCE REALTY TRUST's return on equity significantly trails that of both the industry average and the S&P 500.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- 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 38.6% when compared to the same quarter one year ago, falling from $0.31 million to $0.19 million.
- The gross profit margin for INDEPENDENCE REALTY TRUST is rather low; currently it is at 19.44%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.15% significantly trails the industry average.
- You can view the full Independence Realty Ratings Report.
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Dividend Yield: 10.40%
(NASDAQ:
) shares currently have a dividend yield of 10.40%.
Harvest Capital Credit LLC is a business development company providing structured credit to small businesses. The company has a P/E ratio of 8.55.
The average volume for Harvest Capital Credit has been 20,100 shares per day over the past 30 days. Harvest Capital Credit has a market cap of $81.0 million and is part of the financial services industry. Shares are up 11.4% year-to-date as of the close of trading on Friday.
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TheStreet Ratings rates
Harvest Capital Credit
as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 9.2%. Since the same quarter one year prior, revenues rose by 48.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 426.5% when compared to the same quarter one year prior, rising from $0.52 million to $2.74 million.
- When compared to other companies in the Capital Markets industry and the overall market, HARVEST CAPITAL CREDIT CORP's return on equity is below that of both the industry average and the S&P 500.
- HARVEST CAPITAL CREDIT CORP reported significant earnings per share improvement 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, HARVEST CAPITAL CREDIT CORP increased its bottom line by earning $1.52 versus $0.47 in the prior year. For the next year, the market is expecting a contraction of 3.3% in earnings ($1.47 versus $1.52).
- HCAP has underperformed the S&P 500 Index, declining 13.80% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- You can view the full Harvest Capital Credit Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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