3 Hold-Rated Dividend Stocks: FSP, ARLP, ACSF - TheStreet

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."

Franklin Street Properties

Dividend Yield: 7.30%

Franklin Street Properties

(AMEX:

FSP

) shares currently have a dividend yield of 7.30%.

Franklin Street Properties Corp. is a publicly traded hybrid real estate investment trust. The firm invests in the real estate markets of the United States. It primarily engages in property acquisitions and dispositions, short-term financing, leasing, development and asset management. The company has a P/E ratio of 43.38.

The average volume for Franklin Street Properties has been 346,700 shares per day over the past 30 days. Franklin Street Properties has a market cap of $1.0 billion and is part of the real estate industry. Shares are down 15.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Franklin Street Properties

as a

hold

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:

  • 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 102.0% when compared to the same quarter one year prior, rising from $1.57 million to $3.17 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 1.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FRANKLIN STREET PROPERTIES reported significant earnings per share improvement 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, FRANKLIN STREET PROPERTIES reported lower earnings of $0.14 versus $0.18 in the prior year. This year, the market expects an improvement in earnings ($0.38 versus $0.14).
  • Net operating cash flow has decreased to $26.94 million or 17.89% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • FSP has underperformed the S&P 500 Index, declining 11.94% 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.

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Alliance Resource Partners

Dividend Yield: 15.40%

Alliance Resource Partners

(NASDAQ:

ARLP

) shares currently have a dividend yield of 15.40%.

Alliance Resource Partners, L.P. produces and markets coal primarily to utilities and industrial users in the United States. It operates through the Illinois Basin, Appalachia, White Oak, and Other and Corporate segments. The company has a P/E ratio of 5.04.

The average volume for Alliance Resource Partners has been 271,800 shares per day over the past 30 days. Alliance Resource Partners has a market cap of $1.3 billion and is part of the metals & mining industry. Shares are down 59.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Alliance Resource Partners

as a

hold

. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:

  • 37.04% is the gross profit margin for ALLIANCE RESOURCE PTNRS -LP which we consider to be strong. Regardless of ARLP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ARLP's net profit margin of 14.71% significantly outperformed against the industry.
  • Despite the weak revenue results, ARLP has significantly outperformed against the industry average of 36.8%. Since the same quarter one year prior, revenues slightly dropped by 0.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • ARLP's debt-to-equity ratio of 0.92 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that ARLP's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.59 is low and demonstrates weak liquidity.
  • Net operating cash flow has declined marginally to $190.02 million or 8.20% when compared to the same quarter last year. Despite a decrease in cash flow ALLIANCE RESOURCE PTNRS -LP is still fairing well by exceeding its industry average cash flow growth rate of -25.83%.

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American Capital Senior Floating

Dividend Yield: 11.50%

American Capital Senior Floating

(NASDAQ:

ACSF

) shares currently have a dividend yield of 11.50%.

American Capital Senior Floating, Ltd. is a close ended fixed income mutual fund launched by American Capital Asset Management, LLC. The fund is managed by American Capital ACSF Management, LLC. It invests in fixed income markets of the United States.

The average volume for American Capital Senior Floating has been 41,900 shares per day over the past 30 days. American Capital Senior Floating has a market cap of $101.3 million and is part of the financial services industry. Shares are down 16.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

American Capital Senior Floating

as a

hold

. 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 feeble growth in the company's earnings per share, deteriorating net income and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 5.7%. Since the same quarter one year prior, revenues slightly increased by 9.5%. 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 AMERICAN CAPITAL SR FLTG LTD is currently very high, coming in at 83.08%. 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 -144.33% is in-line with the industry average.
  • Compared to other companies in the Capital Markets industry and the overall market, AMERICAN CAPITAL SR FLTG LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • AMERICAN CAPITAL SR FLTG LTD 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. For the next year, the market is expecting a contraction of 20.3% in earnings ($0.30 versus $0.37).
  • 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 3026.0% when compared to the same quarter one year ago, falling from $0.25 million to -$7.20 million.

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