What To Hold: 3 Hold-Rated Dividend Stocks TAXI, CPTA, NRP
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: 9.90%
(NASDAQ:
) shares currently have a dividend yield of 9.90%.
Medallion Financial Corp., through its subsidiaries, operates as a specialty finance company in the United States. The company engages in originating, acquiring, and servicing loans that finance taxicab medallions and various types of commercial businesses. The company has a P/E ratio of 8.70.
The average volume for Medallion Financial has been 185,300 shares per day over the past 30 days. Medallion Financial has a market cap of $239.3 million and is part of the financial services industry. Shares are down 2.4% year-to-date as of the close of trading on Wednesday.
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TheStreet Ratings rates
Medallion Financial
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and expanding profit margins. 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 revenue growth came in higher than the industry average of 13.2%. Since the same quarter one year prior, revenues slightly increased by 6.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Capital Markets industry average. The net income increased by 22.1% when compared to the same quarter one year prior, going from $6.66 million to $8.13 million.
- MEDALLION FINANCIAL CORP has improved earnings per share by 10.3% 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, MEDALLION FINANCIAL CORP reported lower earnings of $1.14 versus $1.16 in the prior year. This year, the market expects an improvement in earnings ($1.20 versus $1.14).
- 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 Capital Markets industry and the overall market, MEDALLION FINANCIAL CORP's return on equity is below that of both the industry average and the S&P 500.
- TAXI's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 30.16%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full Medallion Financial Ratings Report.
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Dividend Yield: 10.00%
(NASDAQ:
) shares currently have a dividend yield of 10.00%.
Capitala Finance Corp. is a Business Development Company specializing in investments in traditional mezzanine, senior subordinated and unitranche debt, second-lien loans, equity securities issued by lower and traditional middle-market companies, and small and middle-market companies. The company has a P/E ratio of 16.87.
The average volume for Capitala Finance has been 30,000 shares per day over the past 30 days. Capitala Finance has a market cap of $245.1 million and is part of the financial services industry. Shares are up 5.3% year-to-date as of the close of trading on Wednesday.
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TheStreet Ratings rates
Capitala Finance
as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive.
Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 13.2%. Since the same quarter one year prior, revenues rose by 26.9%. 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.
- Net operating cash flow has fallen to -$52.66 million from having none in the same quarter last year. Since the company had no net operating cash flow for the prior period, we cannot calculate a percent change in order to compare its growth rate with that of its industry average.
- When compared to other companies in the Capital Markets industry and the overall market, CAPITALA FINANCE CORP's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for CAPITALA FINANCE CORP is rather high; currently it is at 69.95%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, CPTA's net profit margin of 2.77% is significantly lower than the industry average.
- 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 96.1% when compared to the same quarter one year ago, falling from $7.91 million to $0.31 million.
- You can view the full Capitala Finance Ratings Report.
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Dividend Yield: 19.20%
(NYSE:
) shares currently have a dividend yield of 19.20%.
Natural Resource Partners L.P., through its subsidiaries, owns, manages, and leases mineral properties in the United States. The company has a P/E ratio of 7.78.
The average volume for Natural Resources Partners has been 571,000 shares per day over the past 30 days. Natural Resources Partners has a market cap of $894.0 million and is part of the metals & mining industry. Shares are down 22.6% year-to-date as of the close of trading on Wednesday.
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TheStreet Ratings rates
Natural Resources Partners
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 feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk.
Highlights from the ratings report include:
- NRP's very impressive revenue growth greatly exceeded the industry average of 19.6%. Since the same quarter one year prior, revenues leaped by 50.8%. 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 NATURAL RESOURCE PARTNERS LP is rather high; currently it is at 50.23%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, NRP's net profit margin of 6.93% compares favorably to the industry average.
- Net operating cash flow has declined marginally to $53.66 million or 6.77% when compared to the same quarter last year. Despite a decrease in cash flow of 6.77%, NATURAL RESOURCE PARTNERS LP is in line with the industry average cash flow growth rate of -11.68%.
- 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 81.6% when compared to the same quarter one year ago, falling from $46.98 million to $8.65 million.
- The debt-to-equity ratio is very high at 2.05 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, NRP maintains a poor quick ratio of 0.85, which illustrates the inability to avoid short-term cash problems.
- You can view the full Natural Resources Partners Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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