What To Hold: 3 Hold-Rated Dividend Stocks BPT, CLMT, CVX
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: 19.40%
(NYSE:
) shares currently have a dividend yield of 19.40%.
BP Prudhoe Bay Royalty Trust operates as a grantor trust in the United States. The company holds overriding royalty interest comprising a non-operational interest in minerals in the Prudhoe Bay field located on the North Slope of Alaska. The company has a P/E ratio of 20.89.
The average volume for BP Prudhoe Bay Royalty has been 245,100 shares per day over the past 30 days. BP Prudhoe Bay Royalty has a market cap of $1.2 billion and is part of the energy industry. Shares are down 18.7% year-to-date as of the close of trading on Wednesday.
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TheStreet Ratings rates
BP Prudhoe Bay Royalty
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, notable return on equity 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:
- BPT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.93, which clearly demonstrates the ability to cover short-term cash needs.
- 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 Oil, Gas & Consumable Fuels industry and the overall market, BP PRUDHOE BAY ROYALTY TRUST's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Despite the weak revenue results, BPT has outperformed against the industry average of 19.6%. Since the same quarter one year prior, revenues slightly dropped by 6.8%. 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 significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 6.5% when compared to the same quarter one year ago, dropping from $46.39 million to $43.38 million.
- Looking at the price performance of BPT's shares over the past 12 months, there is not much good news to report: the stock is down 27.80%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.
- You can view the full BP Prudhoe Bay Royalty Ratings Report.
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Calumet Specialty Products Partners
Dividend Yield: 11.00%
Calumet Specialty Products Partners
(NASDAQ:
) shares currently have a dividend yield of 11.00%.
Calumet Specialty Products Partners, L.P. produces and sells specialty hydrocarbon products in North America. It operates in three segments: Specialty Products, Fuel Products, and Oilfield Services.
The average volume for Calumet Specialty Products Partners has been 448,800 shares per day over the past 30 days. Calumet Specialty Products Partners has a market cap of $1.7 billion and is part of the energy industry. Shares are up 15.4% year-to-date as of the close of trading on Wednesday.
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TheStreet Ratings rates
Calumet Specialty Products Partners
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth and good cash flow from operations. However, as a counter to these strengths, 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 came in higher than the industry average of 19.6%. Since the same quarter one year prior, revenues slightly increased by 7.7%. 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.
- Net operating cash flow has significantly increased by 336.37% to $168.30 million when compared to the same quarter last year. In addition, CALUMET SPECIALTY PRODS -LP has also vastly surpassed the industry average cash flow growth rate of -11.94%.
- CALUMET SPECIALTY PRODS -LP 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, CALUMET SPECIALTY PRODS -LP reported poor results of -$1.80 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($0.90 versus -$1.80).
- The debt-to-equity ratio is very high at 2.11 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, CLMT has a quick ratio of 0.66, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CALUMET SPECIALTY PRODS -LP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Calumet Specialty Products Partners Ratings Report.
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Dividend Yield: 4.10%
(NYSE:
) shares currently have a dividend yield of 4.10%.
Chevron Corporation, through its subsidiaries, engages in the petroleum, chemicals, and power and energy operations worldwide. The company operates in two segments, Upstream and Downstream. The company has a P/E ratio of 10.17.
The average volume for Chevron has been 8,442,800 shares per day over the past 30 days. Chevron has a market cap of $194.0 billion and is part of the energy industry. Shares are down 4.9% year-to-date as of the close of trading on Wednesday.
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TheStreet Ratings rates
Chevron
as a
. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, disappointing return on equity and weak operating cash flow.
Highlights from the ratings report include:
- CVX's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.94 is somewhat weak and could be cause for future problems.
- CVX, with its decline in revenue, slightly underperformed the industry average of 19.6%. Since the same quarter one year prior, revenues fell by 22.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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, CHEVRON CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- CHEVRON CORP's earnings per share declined by 28.0% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, CHEVRON CORP reported lower earnings of $10.14 versus $11.09 in the prior year. For the next year, the market is expecting a contraction of 63.7% in earnings ($3.68 versus $10.14).
- You can view the full Chevron Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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