What To Hold: 3 Hold-Rated Dividend Stocks RDS.B, OAK, APO
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 or Stephanie Link.
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: 5.60%
(NYSE:
) shares currently have a dividend yield of 5.60%.
Royal Dutch Shell plc operates as an independent oil and gas company worldwide. The company explores for and extracts crude oil, natural gas, and natural gas liquids. The company has a P/E ratio of 8.57.
The average volume for Royal Dutch Shell has been 1,379,700 shares per day over the past 30 days. Royal Dutch Shell has a market cap of $215.5 billion and is part of the energy industry. Shares are down 2% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
Royal Dutch Shell
as a
. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, 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 deteriorating net income, disappointing return on equity and poor profit margins.
Highlights from the ratings report include:
- Net operating cash flow has significantly increased by 59.38% to $9,608.00 million when compared to the same quarter last year. In addition, ROYAL DUTCH SHELL PLC has also vastly surpassed the industry average cash flow growth rate of -12.58%.
- RDS.B's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.93 is somewhat weak and could be cause for future problems.
- 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, ROYAL DUTCH SHELL PLC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for ROYAL DUTCH SHELL PLC is currently extremely low, coming in at 12.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.83% trails that of the industry average.
- You can view the full Royal Dutch Shell Ratings Report.
Dividend Yield: 4.10%
(NYSE:
) shares currently have a dividend yield of 4.10%.
Oaktree Capital Group, LLC operates as a global investment management firm that focuses on alternative markets. The company has a P/E ratio of 16.74.
The average volume for Oaktree Capital Group has been 304,500 shares per day over the past 30 days. Oaktree Capital Group has a market cap of $2.4 billion and is part of the financial services industry. Shares are up 3.8% year-to-date as of the close of trading on Friday.
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 12.8%. 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 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.
- The share price of OAKTREE CAPITAL GROUP LLC has not done very well: it is down 8.43% 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. 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.
- You can view the full Oaktree Capital Group Ratings Report.
Dividend Yield: 14.90%
(NYSE:
) shares currently have a dividend yield of 14.90%.
Apollo Global Management, LLC is a publicly owned investment manager. It primarily provides its services to endowment and sovereign wealth funds, as well as other institutional and individual investors. The firm manages client focused portfolios. The company has a P/E ratio of 15.10.
The average volume for Apollo Global Management has been 1,300,400 shares per day over the past 30 days. Apollo Global Management has a market cap of $3.8 billion and is part of the financial services industry. Shares are down 1.1% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
Apollo Global Management
as a
. The company's strongest point has been its expanding profit margins. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and feeble growth in the company's earnings per share.
Highlights from the ratings report include:
- APO, with its very weak revenue results, has greatly underperformed against the industry average of 12.8%. Since the same quarter one year prior, revenues plummeted by 65.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- APOLLO GLOBAL MANAGEMENT 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, APOLLO GLOBAL MANAGEMENT LLC reported lower earnings of $0.64 versus $3.97 in the prior year. This year, the market expects an improvement in earnings ($2.03 versus $0.64).
- 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 86.1% when compared to the same quarter one year ago, falling from $159.16 million to $22.18 million.
- The gross profit margin for APOLLO GLOBAL MANAGEMENT LLC is currently lower than what is desirable, coming in at 34.92%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 8.05% significantly trails the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 27.84%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 95.69% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- You can view the full Apollo Global Management Ratings Report.
Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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