What To Hold: 3 Hold-Rated Dividend Stocks NTI, NLY, BP
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: 7.80%
(NYSE:
) shares currently have a dividend yield of 7.80%.
Northern Tier Energy LP, an independent downstream energy company, engages in refining, retail, and pipeline operations in the United States. It operates through two segments, Refining and Retail. The company has a P/E ratio of 9.57.
The average volume for Northern Tier Energy has been 511,900 shares per day over the past 30 days. Northern Tier Energy has a market cap of $2.3 billion and is part of the energy industry. Shares are up 12.6% year-to-date as of the close of trading on Tuesday.
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TheStreet Ratings rates
Northern Tier Energy
as a
. The company's strengths can be seen in multiple areas, such as its notable return on equity, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. 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:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, NORTHERN TIER ENERGY LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has significantly increased by 1080.55% to $85.00 million when compared to the same quarter last year. In addition, NORTHERN TIER ENERGY LP has also vastly surpassed the industry average cash flow growth rate of -11.94%.
- NORTHERN TIER ENERGY LP's earnings per share declined by 22.7% 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, NORTHERN TIER ENERGY LP increased its bottom line by earning $2.60 versus $2.52 in the prior year. This year, the market expects an improvement in earnings ($3.56 versus $2.60).
- 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 22.3% when compared to the same quarter one year ago, dropping from $20.60 million to $16.00 million.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, NTI has underperformed the S&P 500 Index, declining 8.42% 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.
- You can view the full Northern Tier Energy Ratings Report.
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Dividend Yield: 11.40%
(NYSE:
) shares currently have a dividend yield of 11.40%.
Annaly Capital Management, Inc. owns a portfolio of real estate related investments in the United States.
The average volume for Annaly Capital Management has been 7,455,100 shares per day over the past 30 days. Annaly Capital Management has a market cap of $10.0 billion and is part of the real estate industry. Shares are down 1.9% year-to-date as of the close of trading on Tuesday.
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TheStreet Ratings rates
Annaly Capital Management
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 deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The revenue fell significantly faster than the industry average of 10.0%. Since the same quarter one year prior, revenues fell by 28.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for ANNALY CAPITAL MANAGEMENT is currently very high, coming in at 90.45%. 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 -107.46% significantly underperformed when compared to the industry average.
- ANNALY CAPITAL MANAGEMENT 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, 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 ($1.17 versus -$0.96).
- 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 significantly decreased by 164.0% when compared to the same quarter one year ago, falling from $1,028.75 million to -$658.08 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 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.
- You can view the full Annaly Capital Management Ratings Report.
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Dividend Yield: 6.40%
(NYSE:
) shares currently have a dividend yield of 6.40%.
BP p.l.c. operates as an integrated oil and gas company worldwide. It operates in three segments: Upstream, Downstream, and Rosneft. The company has a P/E ratio of 5.08.
The average volume for BP has been 7,903,100 shares per day over the past 30 days. BP has a market cap of $125.2 billion and is part of the energy industry. Shares are down 0.8% year-to-date as of the close of trading on Tuesday.
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TheStreet Ratings rates
BP
as a
. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. 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:
- Net operating cash flow has increased to $7,247.00 million or 33.85% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -11.94%.
- The current debt-to-equity ratio, 0.47, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.98 is somewhat weak and could be cause for future problems.
- BP, with its decline in revenue, slightly underperformed the industry average of 19.6%. Since the same quarter one year prior, revenues fell by 21.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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, BP PLC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for BP PLC is currently extremely low, coming in at 8.97%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -5.95% trails that of the industry average.
- You can view the full BP Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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