What To Hold: 3 Hold-Rated Dividend Stocks OAK, OKE, BXMT
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: 4.20%
(NYSE:
) shares currently have a dividend yield of 4.20%.
Oaktree Capital Group, LLC operates as a global investment management firm that focuses on alternative markets. The company has a P/E ratio of 17.92.
The average volume for Oaktree Capital Group has been 336,500 shares per day over the past 30 days. Oaktree Capital Group has a market cap of $2.3 billion and is part of the financial services industry. Shares are up 1.9% year-to-date as of the close of trading on Tuesday.
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TheStreet Ratings rates
Oaktree Capital Group
as a
.
Highlights from the ratings report include:
- OAK, with its decline in revenue, slightly underperformed the industry average of 13.1%. Since the same quarter one year prior, revenues fell by 13.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- OAKTREE CAPITAL GROUP LLC 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, OAKTREE CAPITAL GROUP LLC reported lower earnings of $3.01 versus $6.43 in the prior year. This year, the market expects an improvement in earnings ($3.25 versus $3.01).
- The share price of OAKTREE CAPITAL GROUP LLC has not done very well: it is down 11.21% 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 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 62.4% when compared to the same quarter one year ago, falling from $64.91 million to $24.39 million.
- You can view the full Oaktree Capital Group Ratings Report.
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Dividend Yield: 5.20%
(NYSE:
) shares currently have a dividend yield of 5.20%.
ONEOK, Inc. engages in the gathering, processing, storage, and transportation of natural gas in the United States. It operates in Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines segments. The company has a P/E ratio of 30.91.
The average volume for ONEOK has been 2,448,600 shares per day over the past 30 days. ONEOK has a market cap of $9.8 billion and is part of the utilities industry. Shares are down 6.9% year-to-date as of the close of trading on Tuesday.
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TheStreet Ratings rates
ONEOK
as a
. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share 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:
- ONEOK INC has improved earnings per share by 28.6% 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, ONEOK INC increased its bottom line by earning $1.53 versus $1.33 in the prior year. This year, the market expects an improvement in earnings ($1.62 versus $1.53).
- The net income growth 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 increased by 4.2% when compared to the same quarter one year prior, going from $90.74 million to $94.54 million.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 19.8%. Since the same quarter one year prior, revenues fell by 17.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- OKE has underperformed the S&P 500 Index, declining 22.54% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- The debt-to-equity ratio is very high at 13.95 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.38, which clearly demonstrates the inability to cover short-term cash needs.
- You can view the full ONEOK Ratings Report.
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Dividend Yield: 7.40%
(NYSE:
) shares currently have a dividend yield of 7.40%.
Blackstone Mortgage Trust, Inc., a real estate finance company, primarily focuses on originating mortgage loans backed by commercial real estate assets. The company operates through Loan Origination and CT Legacy Portfolio segments. The company has a P/E ratio of 15.17.
The average volume for Blackstone Mortgage has been 349,400 shares per day over the past 30 days. Blackstone Mortgage has a market cap of $1.6 billion and is part of the real estate industry. Shares are down 3.7% year-to-date as of the close of trading on Tuesday.
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TheStreet Ratings rates
Blackstone Mortgage
as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. 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:
- BXMT's very impressive revenue growth greatly exceeded the industry average of 9.9%. Since the same quarter one year prior, revenues leaped by 131.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- BLACKSTONE MORTGAGE TR INC 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, BLACKSTONE MORTGAGE TR INC turned its bottom line around by earning $1.86 versus -$0.25 in the prior year. This year, the market expects an improvement in earnings ($2.21 versus $1.86).
- 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, BLACKSTONE MORTGAGE TR INC's return on equity is below that of both the industry average and the S&P 500.
- In its most recent trading session, BXMT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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 Blackstone Mortgage Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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