What To Hold: 3 Hold-Rated Dividend Stocks GHL, CMO, TGP
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: 4.70%
(NYSE:
) shares currently have a dividend yield of 4.70%.
Greenhill & Co., Inc., together with its subsidiaries, operates as an independent investment bank for corporations, partnerships, institutions, and governments worldwide. The company provides financial advice on mergers, acquisitions, restructurings, financings, and capital raising. The company has a P/E ratio of 26.57.
The average volume for Greenhill has been 329,000 shares per day over the past 30 days. Greenhill has a market cap of $1.1 billion and is part of the financial services industry. Shares are down 14.2% year-to-date as of the close of trading on Wednesday.
TheStreet Ratings rates
Greenhill
as a
. Among the primary strengths of the company is its revenue growth. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and poor profit margins.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 12.8%. Since the same quarter one year prior, revenues slightly increased by 0.4%. 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.
- GREENHILL & CO INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, GREENHILL & CO INC reported lower earnings of $1.45 versus $1.56 in the prior year. This year, the market expects an improvement in earnings ($1.89 versus $1.45).
- The gross profit margin for GREENHILL & CO INC is currently lower than what is desirable, coming in at 32.60%. Regardless of GHL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 19.86% trails the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Capital Markets industry average. The net income has decreased by 3.5% when compared to the same quarter one year ago, dropping from $15.78 million to $15.22 million.
- Looking at the price performance of GHL's shares over the past 12 months, there is not much good news to report: the stock is down 25.04%, 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. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, GHL is still more expensive than most of the other companies in its industry.
- You can view the full Greenhill Ratings Report.
Dividend Yield: 11.40%
(NYSE:
) shares currently have a dividend yield of 11.40%.
Capstead Mortgage Corporation operates as a real estate investment trust (REIT) in the United States. The company has a P/E ratio of 9.01.
The average volume for Capstead Mortgage has been 936,600 shares per day over the past 30 days. Capstead Mortgage has a market cap of $1.1 billion and is part of the real estate industry. Shares are down 2.2% year-to-date as of the close of trading on Wednesday.
TheStreet Ratings rates
Capstead Mortgage
as a
. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.
Highlights from the ratings report include:
- The gross profit margin for CAPSTEAD MORTGAGE CORP is currently very high, coming in at 95.23%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 59.35% significantly outperformed against the industry average.
- CMO, with its decline in revenue, slightly underperformed the industry average of 3.1%. Since the same quarter one year prior, revenues slightly dropped by 3.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, CMO has underperformed the S&P 500 Index, declining 7.31% from its price level of one year ago. 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 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 decreased by 9.5% when compared to the same quarter one year ago, dropping from $36.97 million to $33.47 million.
- You can view the full Capstead Mortgage Ratings Report.
Dividend Yield: 7.60%
(NYSE:
) shares currently have a dividend yield of 7.60%.
Teekay LNG Partners L.P. provides marine transportation services for liquefied natural gas (LNG), liquefied petroleum gas (LPG), and crude oil worldwide. The company has a P/E ratio of 14.85.
The average volume for Teekay LNG Partners has been 352,700 shares per day over the past 30 days. Teekay LNG Partners has a market cap of $2.8 billion and is part of the transportation industry. Shares are down 14.9% year-to-date as of the close of trading on Wednesday.
TheStreet Ratings rates
Teekay LNG Partners
as a
. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, generally higher debt management risk and disappointing return on equity.
Highlights from the ratings report include:
- The gross profit margin for TEEKAY LNG PARTNERS LP is currently very high, coming in at 75.77%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 33.17% significantly outperformed against the industry average.
- Despite the weak revenue results, TGP has outperformed against the industry average of 18.7%. Since the same quarter one year prior, revenues slightly dropped by 5.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The share price of TEEKAY LNG PARTNERS LP has not done very well: it is down 10.25% 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 debt-to-equity ratio of 1.29 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, TGP has a quick ratio of 0.59, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- 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, TEEKAY LNG PARTNERS LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full Teekay LNG Partners Ratings Report.
Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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