What To Hold: 3 Hold-Rated Dividend Stocks CAPL, BKEP, RESI - 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."

CrossAmerica Partners

Dividend Yield: 8.90%

CrossAmerica Partners

(NYSE:

CAPL

) shares currently have a dividend yield of 8.90%.

CrossAmerica Partners LP operates as a wholesale distributor of motor fuels, and owns and leases real estate used in the retail distribution of motor fuels in the United States.

The average volume for CrossAmerica Partners has been 139,900 shares per day over the past 30 days. CrossAmerica Partners has a market cap of $647.9 million and is part of the energy industry. Shares are down 37.2% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

CrossAmerica Partners

as a

hold

. Among the primary strengths of the company is its generally strong cash flow from operations. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk.

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 227.14% to $5.56 million when compared to the same quarter last year. In addition, CROSSAMERICA PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -19.46%.
  • Despite the weak revenue results, CAPL has outperformed against the industry average of 34.1%. Since the same quarter one year prior, revenues fell by 16.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • CROSSAMERICA PARTNERS LP 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CROSSAMERICA PARTNERS LP swung to a loss, reporting -$0.22 versus $1.19 in the prior year. This year, the market expects an improvement in earnings ($0.20 versus -$0.22).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CROSSAMERICA PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • 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 98.4% when compared to the same quarter one year ago, falling from $1.89 million to $0.03 million.

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Blueknight Energy Partners

Dividend Yield: 9.40%

Blueknight Energy Partners

(NASDAQ:

BKEP

) shares currently have a dividend yield of 9.40%.

Blueknight Energy Partners, L.P. provides integrated terminalling, storage, processing, gathering, and transportation services for companies engaged in the production, distribution, and marketing of crude oil and asphalt products in the United States. The company has a P/E ratio of 20.20.

The average volume for Blueknight Energy Partners has been 63,600 shares per day over the past 30 days. Blueknight Energy Partners has a market cap of $199.7 million and is part of the energy industry. Shares are down 8.9% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Blueknight Energy Partners

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and expanding profit margins. 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 disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 34.1%. Since the same quarter one year prior, revenues slightly increased by 1.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is very high at 2.22 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, BKEP maintains a poor quick ratio of 0.73, which illustrates the inability to avoid short-term cash problems.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, BLUEKNIGHT ENERGY PRTNRS 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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Altisource Residential Corporation

Dividend Yield: 14.50%

Altisource Residential Corporation

(NYSE:

RESI

) shares currently have a dividend yield of 14.50%.

Altisource Residential Corporation, through its subsidiary, Altisource Residential, L.P., focuses on acquiring, owning, and managing single-family rental properties in the United States. The company has a P/E ratio of 8.36.

The average volume for Altisource Residential Corporation has been 454,300 shares per day over the past 30 days. Altisource Residential Corporation has a market cap of $865.7 million and is part of the real estate industry. Shares are down 23.8% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Altisource Residential Corporation

as a

hold

. Among the primary strengths of the company is its attractive valuation levels, considering its current price compared to earnings, book value and other measures. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

  • The revenue fell significantly faster than the industry average of 9.8%. Since the same quarter one year prior, revenues fell by 34.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • ALTISOURCE RESIDENTIAL CORP 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. 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, ALTISOURCE RESIDENTIAL CORP increased its bottom line by earning $3.33 versus $1.16 in the prior year. For the next year, the market is expecting a contraction of 66.7% in earnings ($1.11 versus $3.33).
  • 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 80.7% when compared to the same quarter one year ago, falling from $67.78 million to $13.09 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, ALTISOURCE RESIDENTIAL CORP's return on equity is below that of both the industry average and the S&P 500.

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