What To Hold: 3 Hold-Rated Dividend Stocks OFS, WHF, TLP
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: 11.10%
(NASDAQ:
) shares currently have a dividend yield of 11.10%.
OFS Capital Corporation is a business development company specializing in direct and fund investments. For direct, it specializes in debt and structured equity investments in lower middle market companies. The fund invests in companies based in United States. The company has a P/E ratio of 12.09.
The average volume for OFS Capital has been 18,500 shares per day over the past 30 days. OFS Capital has a market cap of $117.8 million and is part of the financial services industry. Shares are up 4.5% year-to-date as of the close of trading on Monday.
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TheStreet Ratings rates
OFS Capital
as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- OFS's very impressive revenue growth greatly exceeded the industry average of 9.2%. Since the same quarter one year prior, revenues leaped by 54.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- OFS CAPITAL CORP 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, OFS CAPITAL CORP increased its bottom line by earning $0.81 versus $0.12 in the prior year. This year, the market expects an improvement in earnings ($1.28 versus $0.81).
- In its most recent trading session, OFS 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.
- Net operating cash flow has significantly decreased to -$30.28 million or 399.36% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full OFS Capital Ratings Report.
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Dividend Yield: 11.30%
(NASDAQ:
) shares currently have a dividend yield of 11.30%.
Whitehorse Finance, LLC is a business development company. The company has a P/E ratio of 8.53.
The average volume for WhiteHorse Finance has been 35,000 shares per day over the past 30 days. WhiteHorse Finance has a market cap of $189.1 million and is part of the financial services industry. Shares are up 10.4% year-to-date as of the close of trading on Monday.
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TheStreet Ratings rates
WhiteHorse Finance
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, 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 and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 9.2%. Since the same quarter one year prior, revenues rose by 27.8%. 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 gross profit margin for WHITEHORSE FINANCE INC is rather high; currently it is at 60.36%. Regardless of WHF's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WHF's net profit margin of 32.63% significantly outperformed against the industry.
- WHITEHORSE FINANCE INC's earnings per share declined by 42.9% 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, WHITEHORSE FINANCE INC increased its bottom line by earning $1.32 versus $1.26 in the prior year. This year, the market expects an improvement in earnings ($1.34 versus $1.32).
- The share price of WHITEHORSE FINANCE INC has not done very well: it is down 10.13% 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 43.3% when compared to the same quarter one year ago, falling from $6.34 million to $3.59 million.
- You can view the full WhiteHorse Finance Ratings Report.
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Dividend Yield: 8.00%
(NYSE:
) shares currently have a dividend yield of 8.00%.
TransMontaigne Partners L.P. operates as a terminaling and transportation company. The company has a P/E ratio of 21.09.
The average volume for TransMontaigne Partners has been 46,500 shares per day over the past 30 days. TransMontaigne Partners has a market cap of $533.9 million and is part of the energy industry. Shares are up 3.2% year-to-date as of the close of trading on Monday.
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TheStreet Ratings rates
TransMontaigne Partners
as a
. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins and good cash flow from operations. 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 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 8.6% when compared to the same quarter one year prior, going from $6.00 million to $6.52 million.
- The gross profit margin for TRANSMONTAIGNE PARTNERS LP is rather high; currently it is at 52.70%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.26% significantly outperformed against the industry average.
- The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.97 is somewhat weak and could be cause for future problems.
- 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TRANSMONTAIGNE PARTNERS LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- TLP has underperformed the S&P 500 Index, declining 23.47% 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.
- You can view the full TransMontaigne Partners Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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