3 Hold-Rated Dividend Stocks: WPT, FSFR, RRMS - 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."

World Point Terminals

Dividend Yield: 9.30%

World Point Terminals

(NYSE:

WPT

) shares currently have a dividend yield of 9.30%.

World Point Terminals, LP owns, operates, develops, and acquires terminals and other assets for the storage of light refined products, heavy refined products, and crude oil in the East Coast, Gulf Coast, and Midwest regions of the United States. The company has a P/E ratio of 14.13.

The average volume for World Point Terminals has been 28,500 shares per day over the past 30 days. World Point Terminals has a market cap of $236.3 million and is part of the energy industry. Shares are down 35.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

World Point Terminals

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, 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:

  • The revenue growth greatly exceeded the industry average of 36.7%. Since the same quarter one year prior, revenues slightly increased by 9.0%. 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.
  • WPT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.03, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for WORLD POINT TERMINALS is rather high; currently it is at 67.36%. Regardless of WPT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WPT's net profit margin of 35.08% significantly outperformed against the industry.
  • WORLD POINT TERMINALS's earnings per share declined by 7.4% in the most recent quarter compared to 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, WORLD POINT TERMINALS increased its bottom line by earning $0.98 versus $0.76 in the prior year. For the next year, the market is expecting a contraction of 5.1% in earnings ($0.93 versus $0.98).
  • Looking at the price performance of WPT's shares over the past 12 months, there is not much good news to report: the stock is down 32.99%, 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. 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.

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Fifth Street Senior Floating Rate

Dividend Yield: 10.30%

Fifth Street Senior Floating Rate

(NASDAQ:

FSFR

) shares currently have a dividend yield of 10.30%.

Fifth Street Senior Floating Rate Corp. The company has a P/E ratio of 8.73.

The average volume for Fifth Street Senior Floating Rate has been 102,700 shares per day over the past 30 days. Fifth Street Senior Floating Rate has a market cap of $257.2 million and is part of the financial services industry. Shares are down 14.5% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Fifth Street Senior Floating Rate

as a

hold

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

Highlights from the ratings report include:

  • FSFR's very impressive revenue growth greatly exceeded the industry average of 5.6%. Since the same quarter one year prior, revenues leaped by 256.4%. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 19.4% when compared to the same quarter one year prior, going from $1.79 million to $2.14 million.
  • When compared to other companies in the Capital Markets industry and the overall market, FIFTH STREET SR FLTG RATE CP's return on equity is below that of both the industry average and the S&P 500.
  • The share price of FIFTH STREET SR FLTG RATE CP has not done very well: it is down 22.20% 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • Net operating cash flow has significantly decreased to -$15.47 million or 157.90% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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Rose Rock Midstream

Dividend Yield: 12.40%

Rose Rock Midstream

(NYSE:

RRMS

) shares currently have a dividend yield of 12.40%.

Rose Rock Midstream, L.P. owns, operates, develops, and acquires a portfolio of midstream energy assets. The company gathers, transports, stores, distributes, and markets crude oil in Colorado, Kansas, Louisiana, Montana, New Mexico, North Dakota, Ohio, Oklahoma, Texas, and Wyoming. The company has a P/E ratio of 14.74.

The average volume for Rose Rock Midstream has been 169,000 shares per day over the past 30 days. Rose Rock Midstream has a market cap of $781.1 million and is part of the energy industry. Shares are down 53.7% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Rose Rock Midstream

as a

hold

. The company's strengths can be seen in multiple areas, such as its notable return on equity, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ROSE ROCK MIDSTREAM LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 36.7%. Since the same quarter one year prior, revenues fell by 36.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 60.34%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 34.09% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • ROSE ROCK MIDSTREAM LP's earnings per share declined by 34.1% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, ROSE ROCK MIDSTREAM LP reported lower earnings of $1.52 versus $1.70 in the prior year. For the next year, the market is expecting a contraction of 13.5% in earnings ($1.32 versus $1.52).

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