What To Hold: 3 Hold-Rated Dividend Stocks APAM, ETP, TWO - 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."

Artisan Partners Asset Management

Dividend Yield: 6.10%

Artisan Partners Asset Management

(NYSE:

APAM

) shares currently have a dividend yield of 6.10%.

Artisan Partners Asset Management Inc is publicly owned investment manager. It provides its services to pension and profit sharing plans, trusts, endowments, foundations, charitable organizations, government entities, private funds and non-U.S. funds, as well as mutual funds, non-U.S. The company has a P/E ratio of 19.53.

The average volume for Artisan Partners Asset Management has been 362,700 shares per day over the past 30 days. Artisan Partners Asset Management has a market cap of $1.6 billion and is part of the financial services industry. Shares are down 21.5% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Artisan Partners Asset Management

as a

hold

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

Highlights from the ratings report include:

  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Capital Markets industry and the overall market, ARTISAN PARTNERS ASSET MGMT's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • ARTISAN PARTNERS ASSET MGMT's earnings per share declined by 22.8% 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, ARTISAN PARTNERS ASSET MGMT continued to lose money by earning -$0.72 versus -$2.02 in the prior year. This year, the market expects an improvement in earnings ($2.70 versus -$0.72).
  • 36.13% is the gross profit margin for ARTISAN PARTNERS ASSET MGMT which we consider to be strong. Regardless of APAM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.31% trails the industry average.
  • Looking at the price performance of APAM's shares over the past 12 months, there is not much good news to report: the stock is down 26.23%, 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. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • Net operating cash flow has declined marginally to $84.32 million or 7.34% 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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Energy Transfer Partners

Dividend Yield: 10.90%

Energy Transfer Partners

(NYSE:

ETP

) shares currently have a dividend yield of 10.90%.

Energy Transfer Partners, L.P. engages in the natural gas midstream, and intrastate transportation and storage businesses in the United States. The company has a P/E ratio of 107.31.

The average volume for Energy Transfer Partners has been 3,894,300 shares per day over the past 30 days. Energy Transfer Partners has a market cap of $19.4 billion and is part of the energy industry. Shares are down 40.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Energy Transfer Partners

as a

hold

. The company's strengths can be seen in multiple areas, such as its good cash flow from operations 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 poor profit margins.

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 104.27% to $860.00 million when compared to the same quarter last year. In addition, ENERGY TRANSFER PARTNERS -LP has also vastly surpassed the industry average cash flow growth rate of -25.83%.
  • Along with the very weak revenue results, ETP underperformed when compared to the industry average of 36.8%. Since the same quarter one year prior, revenues plummeted by 55.8%. 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 40.57%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 77.27% compared to 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, ETP is still more expensive than most of the other companies in its industry.
  • The debt-to-equity ratio of 1.30 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, ETP maintains a poor quick ratio of 0.86, which illustrates the inability to avoid short-term cash problems.

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Two Harbors Investment

Dividend Yield: 12.40%

Two Harbors Investment

(NYSE:

TWO

) shares currently have a dividend yield of 12.40%.

Two Harbors Investment Corp. The company has a P/E ratio of 12.57.

The average volume for Two Harbors Investment has been 2,778,100 shares per day over the past 30 days. Two Harbors Investment has a market cap of $3.1 billion and is part of the real estate industry. Shares are down 16% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Two Harbors Investment

as a

hold

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and expanding profit margins. 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:

  • Net operating cash flow has slightly increased to -$584.29 million or 4.07% when compared to the same quarter last year. Despite an increase in cash flow, TWO HARBORS INVESTMENT CORP's average is still marginally south of the industry average growth rate of 9.44%.
  • The gross profit margin for TWO HARBORS INVESTMENT CORP is currently very high, coming in at 81.30%. Regardless of TWO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TWO's net profit margin of -16.97% significantly underperformed when compared to 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 118.0% when compared to the same quarter one year ago, falling from $193.59 million to -$34.79 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, TWO HARBORS INVESTMENT CORP's return on equity is below that of both the industry average and the S&P 500.

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