What To Hold: 3 Hold-Rated Dividend Stocks NLY, COH, LXP

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."

Annaly Capital Management

Dividend Yield: 12.00%

Annaly Capital Management

(NYSE:

NLY

) shares currently have a dividend yield of 12.00%.

Annaly Capital Management, Inc. owns a portfolio of real estate related investments in the United States. The company has a P/E ratio of 167.33.

The average volume for Annaly Capital Management has been 9,598,200 shares per day over the past 30 days. Annaly Capital Management has a market cap of $9.5 billion and is part of the real estate industry. Shares are down 7.9% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Annaly Capital Management

as a

hold

. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins and growth in earnings per share. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 368.3% when compared to the same quarter one year prior, rising from -$335.51 million to $900.22 million.
  • The gross profit margin for ANNALY CAPITAL MANAGEMENT is currently very high, coming in at 89.73%. Regardless of NLY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NLY's net profit margin of 177.72% significantly outperformed against the industry.
  • ANNALY CAPITAL MANAGEMENT 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, ANNALY CAPITAL MANAGEMENT swung to a loss, reporting -$0.96 versus $3.72 in the prior year. This year, the market expects an improvement in earnings ($1.24 versus -$0.96).
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, ANNALY CAPITAL MANAGEMENT's return on equity significantly trails that of both the industry average and the S&P 500.
  • NLY has underperformed the S&P 500 Index, declining 11.55% from its price level of one year ago. 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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Coach

Dividend Yield: 4.30%

Coach

(NYSE:

COH

) shares currently have a dividend yield of 4.30%.

Coach, Inc. provides luxury accessories and lifestyle collections in the United States. The company has a P/E ratio of 23.00.

The average volume for Coach has been 4,034,500 shares per day over the past 30 days. Coach has a market cap of $8.8 billion and is part of the consumer non-durables industry. Shares are down 13.3% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Coach

as a

hold

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, 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 deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • Despite currently having a low debt-to-equity ratio of 0.36, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that COH's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.03 is high and demonstrates strong liquidity.
  • The gross profit margin for COACH INC is rather high; currently it is at 67.69%. Regardless of COH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.35% trails the industry average.
  • 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 Textiles, Apparel & Luxury Goods industry and the overall market on the basis of return on equity, COACH INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • 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 greatly underperformed compared to the Textiles, Apparel & Luxury Goods industry average. The net income has decreased by 19.1% when compared to the same quarter one year ago, dropping from $119.10 million to $96.40 million.

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Lexington Realty

Dividend Yield: 7.50%

Lexington Realty

(NYSE:

LXP

) shares currently have a dividend yield of 7.50%.

Lexington Corporate Properties Trust operates as a self-managed and self-administered real estate investment trust (REIT). The company acquires, owns, and manages a portfolio of office, industrial, and retail properties net-leased to corporate tenants in the United States. The company has a P/E ratio of 21.09.

The average volume for Lexington Realty has been 1,641,500 shares per day over the past 30 days. Lexington Realty has a market cap of $2.1 billion and is part of the real estate industry. Shares are down 17.7% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Lexington Realty

as a

hold

. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. 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:

  • LEXINGTON REALTY TRUST 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, LEXINGTON REALTY TRUST turned its bottom line around by earning $0.16 versus -$0.18 in the prior year. This year, the market expects an improvement in earnings ($0.51 versus $0.16).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 241.4% when compared to the same quarter one year prior, rising from $14.45 million to $49.33 million.
  • 48.07% is the gross profit margin for LEXINGTON REALTY TRUST which we consider to be strong. Regardless of LXP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LXP's net profit margin of 44.58% significantly outperformed against the industry.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, LEXINGTON REALTY TRUST's return on equity is below that of both the industry average and the S&P 500.
  • LXP has underperformed the S&P 500 Index, declining 17.37% 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.

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