What To Hold: 3 Hold-Rated Dividend Stocks STWD, ENLK, KRG

These 3 dividend stocks are rated a Hold by TheStreet
By TheStreet Wire ,

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."

Starwood Property

Dividend Yield: 9.50%

Starwood Property

(NYSE:

STWD

) shares currently have a dividend yield of 9.50%.

Starwood Property Trust, Inc. originates, acquires, finances, and manages commercial mortgage loans, other commercial real estate debt investments, commercial mortgage-backed securities, and other commercial real estate-related debt investments in the United States and Europe. The company has a P/E ratio of 10.80.

The average volume for Starwood Property has been 2,297,300 shares per day over the past 30 days. Starwood Property has a market cap of $4.8 billion and is part of the real estate industry. Shares are down 14.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Starwood Property

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels 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:

  • STWD's revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 6.8%. 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 company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income has significantly decreased by 29.3% when compared to the same quarter one year ago, falling from $165.04 million to $116.74 million.
  • 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, STARWOOD PROPERTY TRUST INC's return on equity is below that of both the industry average and the S&P 500.

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EnLink Midstream Partners

Dividend Yield: 9.20%

EnLink Midstream Partners

(NYSE:

ENLK

) shares currently have a dividend yield of 9.20%.

Enlink Midstream Partners, LP, through its subsidiary, EnLink Midstream Operating, LP, provides midstream energy services.

The average volume for EnLink Midstream Partners has been 651,500 shares per day over the past 30 days. EnLink Midstream Partners has a market cap of $5.5 billion and is part of the energy industry. Shares are down 44.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

EnLink Midstream Partners

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 37.2%. Since the same quarter one year prior, revenues rose by 37.4%. 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.
  • Despite currently having a low debt-to-equity ratio of 0.47, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.04 is sturdy.
  • The gross profit margin for ENLINK MIDSTREAM PARTNERS LP is currently extremely low, coming in at 14.66%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 4.35% is above that of the industry average.
  • 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, ENLINK MIDSTREAM PARTNERS LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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Kite Realty Group

Dividend Yield: 4.20%

Kite Realty Group

(NYSE:

KRG

) shares currently have a dividend yield of 4.20%.

Kite Realty Group Trust is a publicly owned real estate investment trust. The firm invests in real estate markets of the United States. The company has a P/E ratio of 93.21.

The average volume for Kite Realty Group has been 481,800 shares per day over the past 30 days. Kite Realty Group has a market cap of $2.2 billion and is part of the real estate industry. Shares are down 9.9% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Kite Realty Group

as a

hold

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income and notable return on equity. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • KITE REALTY GROUP TRUST 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, KITE REALTY GROUP TRUST continued to lose money by earning -$0.30 versus -$0.40 in the prior year. This year, the market expects an improvement in earnings ($0.09 versus -$0.30).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 117.7% when compared to the same quarter one year prior, rising from -$14.28 million to $2.53 million.
  • KRG, with its decline in revenue, slightly underperformed the industry average of 6.0%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • After a year of stock price fluctuations, the net result is that KRG's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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.
  • The gross profit margin for KITE REALTY GROUP TRUST is currently lower than what is desirable, coming in at 25.89%. Regardless of KRG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, KRG's net profit margin of 2.89% is significantly lower than the industry average.

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