What To Hold: 3 Hold-Rated Dividend Stocks DKL, RIGP, TPVG

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."

Delek Logistics Partners

Dividend Yield: 9.80%

Delek Logistics Partners

(NYSE:

DKL

) shares currently have a dividend yield of 9.80%.

Delek Logistics Partners, LP owns and operates logistics and marketing assets for crude oil, and intermediate and refined products in the United States. It operates in two segments, Pipelines and Transportation, and Wholesale Marketing and Terminalling. The company has a P/E ratio of 10.15.

The average volume for Delek Logistics Partners has been 77,500 shares per day over the past 30 days. Delek Logistics Partners has a market cap of $623.2 million and is part of the energy industry. Shares are down 27.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Delek Logistics Partners

as a

hold

. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations 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 and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 10.3% when compared to the same quarter one year prior, going from $14.00 million to $15.45 million.
  • Net operating cash flow has significantly increased by 67.25% to $26.37 million when compared to the same quarter last year. In addition, DELEK LOGISTICS PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -49.98%.
  • DKL, with its decline in revenue, slightly underperformed the industry average of 24.0%. Since the same quarter one year prior, revenues fell by 27.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Looking at the price performance of DKL's shares over the past 12 months, there is not much good news to report: the stock is down 34.55%, 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.
  • DELEK LOGISTICS PARTNERS LP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, DELEK LOGISTICS PARTNERS LP reported lower earnings of $2.57 versus $2.87 in the prior year. For the next year, the market is expecting a contraction of 12.4% in earnings ($2.25 versus $2.57).

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Transocean Partners

Dividend Yield: 13.20%

Transocean Partners

(NYSE:

RIGP

) shares currently have a dividend yield of 13.20%.

Transocean Partners LLC, together with its subsidiaries, operates as an offshore drilling contractor in the United States Gulf of Mexico. The company acquires, owns, and operates offshore drilling rigs. The company has a P/E ratio of 7.02.

The average volume for Transocean Partners has been 137,300 shares per day over the past 30 days. Transocean Partners has a market cap of $750.1 million and is part of the energy industry. Shares are up 23.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Transocean Partners

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 21.6%. Since the same quarter one year prior, revenues slightly increased by 2.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • RIGP 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 4.03, which clearly demonstrates the ability to cover short-term cash needs.
  • TRANSOCEAN PARTNERS LLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TRANSOCEAN PARTNERS LLC swung to a loss, reporting -$1.03 versus $1.25 in the prior year. This year, the market expects an improvement in earnings ($1.92 versus -$1.03).
  • 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 Energy Equipment & Services industry and the overall market on the basis of return on equity, TRANSOCEAN PARTNERS LLC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Net operating cash flow has decreased to $78.00 million or 35.53% when compared to the same quarter last year. Despite a decrease in cash flow TRANSOCEAN PARTNERS LLC is still fairing well by exceeding its industry average cash flow growth rate of -57.33%.

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TriplePoint Venture Growth BDC

Dividend Yield: 12.40%

TriplePoint Venture Growth BDC

(NYSE:

TPVG

) shares currently have a dividend yield of 12.40%.

TriplePoint Venture Growth BDC Corp is a business development company specializing investments in growth stage. It also provides debt financing to venture growth space companies which includes growth capital loans, equipment financings, revolving loans, and direct equity investments. The company has a P/E ratio of 7.46.

The average volume for TriplePoint Venture Growth BDC has been 97,800 shares per day over the past 30 days. TriplePoint Venture Growth BDC has a market cap of $190.1 million and is part of the financial services industry. Shares are down 3.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

TriplePoint Venture Growth BDC

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 13.7%. Since the same quarter one year prior, revenues rose by 12.9%. 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 TRIPLEPOINT VENTURE GWTH BDC is currently very high, coming in at 76.92%. 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 -65.50% is in-line with the industry average.
  • TRIPLEPOINT VENTURE GWTH BDC 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, TRIPLEPOINT VENTURE GWTH BDC reported lower earnings of $1.04 versus $1.24 in the prior year. This year, the market expects an improvement in earnings ($1.49 versus $1.04).
  • Net operating cash flow has significantly decreased to -$19.21 million or 1451.93% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The share price of TRIPLEPOINT VENTURE GWTH BDC has not done very well: it is down 10.61% 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. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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