What To Hold: 3 Hold-Rated Dividend Stocks EPD, AINV, TEF
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: 5.80%
(NYSE:
) shares currently have a dividend yield of 5.80%.
Enterprise Products Partners L.P. provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products in the United States and internationally. The company has a P/E ratio of 21.05.
The average volume for Enterprise Products Partners has been 4,762,900 shares per day over the past 30 days. Enterprise Products Partners has a market cap of $53.2 billion and is part of the energy industry. Shares are down 27.4% year-to-date as of the close of trading on Thursday.
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TheStreet Ratings rates
Enterprise Products Partners
as a
. Among the primary strengths of the company is its reasonable valuation levels, considering its current price compared to earnings, book value and other measures. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and poor profit margins.
Highlights from the ratings report include:
- EPD, with its decline in revenue, underperformed when compared the industry average of 36.8%. Since the same quarter one year prior, revenues fell by 48.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Looking at the price performance of EPD's shares over the past 12 months, there is not much good news to report: the stock is down 32.41%, 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.
- 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, ENTERPRISE PRODS PRTNRS -LP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- You can view the full Enterprise Products Partners Ratings Report.
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Dividend Yield: 13.20%
(NASDAQ:
) shares currently have a dividend yield of 13.20%.
Apollo Investment Corporation is business development company and operates as a closed-end management investment company. The company invests in middle market companies. It provides direct equity capital, mezzanine and senior secured loans, and subordinated debt and loans.
The average volume for Apollo Investment has been 1,699,000 shares per day over the past 30 days. Apollo Investment has a market cap of $1.4 billion and is part of the financial services industry. Shares are down 18.1% year-to-date as of the close of trading on Thursday.
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TheStreet Ratings rates
Apollo Investment
as a
. The company's strengths can be seen in multiple areas, such as its expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The gross profit margin for APOLLO INVESTMENT CORP is currently very high, coming in at 72.47%. 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 -1.77% is in-line with the industry average.
- Net operating cash flow has significantly increased by 145.34% to $83.12 million when compared to the same quarter last year. Despite an increase in cash flow of 145.34%, APOLLO INVESTMENT CORP is still growing at a significantly lower rate than the industry average of 265.45%.
- AINV, with its decline in revenue, underperformed when compared the industry average of 5.9%. Since the same quarter one year prior, revenues fell by 17.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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 Capital Markets industry. The net income has significantly decreased by 104.2% when compared to the same quarter one year ago, falling from $41.97 million to -$1.75 million.
- 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 Capital Markets industry and the overall market, APOLLO INVESTMENT CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Apollo Investment Ratings Report.
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Dividend Yield: 7.10%
(NYSE:
) shares currently have a dividend yield of 7.10%.
Telefonica, S.A. provides fixed and mobile communication services primarily in Europe and Latin America. The company offers mobile voice, value added, mobile data and Internet, wholesale, corporate, roaming, fixed wireless, and trunking and paging services.
The average volume for Telefonica has been 1,637,400 shares per day over the past 30 days. Telefonica has a market cap of $61.0 billion and is part of the telecommunications industry. Shares are down 11.5% year-to-date as of the close of trading on Thursday.
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TheStreet Ratings rates
Telefonica
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and poor profit margins.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 5.8%. Since the same quarter one year prior, revenues rose by 30.9%. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 23.4% when compared to the same quarter one year prior, going from $801.83 million to $989.68 million.
- In comparison to the other companies in the Diversified Telecommunication Services industry and the overall market, TELEFONICA SA's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Although TEF's debt-to-equity ratio of 3.04 is very high, it is currently less than that of the industry average. Along with this, the company manages to maintain a quick ratio of 0.36, which clearly demonstrates the inability to cover short-term cash needs.
- The gross profit margin for TELEFONICA SA is currently lower than what is desirable, coming in at 29.86%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 7.42% trails that of the industry average.
- You can view the full Telefonica Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.