What To Hold: 3 Hold-Rated Dividend Stocks SPH, PNNT, GARS
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: 11.50%
(NYSE:
) shares currently have a dividend yield of 11.50%.
Suburban Propane Partners, L.P., through its subsidiaries, engages in the retail marketing and distribution of propane, fuel oil, and refined fuels. The company has a P/E ratio of 22.40.
The average volume for Suburban Propane Partners has been 217,000 shares per day over the past 30 days. Suburban Propane Partners has a market cap of $1.9 billion and is part of the utilities industry. Shares are down 30.2% year-to-date as of the close of trading on Tuesday.
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TheStreet Ratings rates
Suburban Propane Partners
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 and feeble growth in the company's earnings per share.
Highlights from the ratings report include:
- SPH, with its decline in revenue, slightly underperformed the industry average of 27.5%. Since the same quarter one year prior, revenues fell by 27.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The change in net income from the same quarter one year ago has significantly exceeded that of the Gas Utilities industry average, but is less than that of the S&P 500. The net income has decreased by 22.7% when compared to the same quarter one year ago, dropping from -$54.72 million to -$67.14 million.
- SUBURBAN PROPANE PRTNRS -LP's earnings per share declined by 23.3% in the most recent quarter compared to 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, SUBURBAN PROPANE PRTNRS -LP reported lower earnings of $1.38 versus $1.55 in the prior year. This year, the market expects an improvement in earnings ($2.15 versus $1.38).
- Looking at the price performance of SPH's shares over the past 12 months, there is not much good news to report: the stock is down 29.91%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, SPH is still more expensive than most of the other companies in its industry.
- The gross profit margin for SUBURBAN PROPANE PRTNRS -LP is currently extremely low, coming in at 0.14%. It has decreased from the same quarter the previous year.
- You can view the full Suburban Propane Partners Ratings Report.
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Pennant Park Investment Corporation
Dividend Yield: 16.90%
Pennant Park Investment Corporation
(NASDAQ:
) shares currently have a dividend yield of 16.90%.
PennantPark Investment Corporation is a publicly listed business development firm specializing in direct and mezzanine investments in middle market companies. It invests in the form of mezzanine debt, senior secured loans, and equity investments. The company has a P/E ratio of 3.98.
The average volume for Pennant Park Investment Corporation has been 507,800 shares per day over the past 30 days. Pennant Park Investment Corporation has a market cap of $482.3 million and is part of the financial services industry. Shares are down 30.4% year-to-date as of the close of trading on Tuesday.
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TheStreet Ratings rates
Pennant Park Investment Corporation
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 5.9%. Since the same quarter one year prior, revenues rose by 14.6%. 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 PENNANTPARK INVESTMENT CORP is rather high; currently it is at 67.10%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 12.14% trails the industry average.
- PENNANTPARK INVESTMENT CORP 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, PENNANTPARK INVESTMENT CORP increased its bottom line by earning $1.66 versus $1.39 in the prior year. For the next year, the market is expecting a contraction of 38.9% in earnings ($1.02 versus $1.66).
- 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 84.5% when compared to the same quarter one year ago, falling from $31.95 million to $4.94 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 Capital Markets industry and the overall market, PENNANTPARK INVESTMENT CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Pennant Park Investment Corporation Ratings Report.
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Dividend Yield: 10.40%
(NASDAQ:
) shares currently have a dividend yield of 10.40%.
Garrison Capital Inc. is a business development company specializing in investments primarily in the debt and equity of middle market companies. The company has a P/E ratio of 18.37.
The average volume for Garrison Capital has been 38,900 shares per day over the past 30 days. Garrison Capital has a market cap of $224.7 million and is part of the financial services industry. Shares are down 10.2% year-to-date as of the close of trading on Tuesday.
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TheStreet Ratings rates
Garrison Capital
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. 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:
- GARS's revenue growth has slightly outpaced the industry average of 5.9%. Since the same quarter one year prior, revenues slightly increased by 2.4%. 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 GARRISON CAPITAL INC is rather high; currently it is at 68.38%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 29.47% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 243.33% to $7.56 million when compared to the same quarter last year. Despite an increase in cash flow, GARRISON CAPITAL INC's cash flow growth rate is still lower than the industry average growth rate of 265.45%.
- 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 57.2% when compared to the same quarter one year ago, falling from $9.06 million to $3.88 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Capital Markets industry and the overall market, GARRISON CAPITAL INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Garrison Capital Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.