4 Hold-Rated Dividend Stocks

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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 and 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 4 stocks with substantial yields, that ultimately, we have rated "Hold."

Capital Product Partners L.P

Dividend Yield: 12.10%

Capital Product Partners L.P (NASDAQ: CPLP) shares currently have a dividend yield of 12.10%.

Capital Product Partners L.P., a shipping company, provides marine transportation services in Greece. Currently there are 3 analysts that rate Capital Product Partners L.P a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Capital Product Partners L.P has been 225,600 shares per day over the past 30 days. Capital Product Partners L.P has a market cap of $532.8 million and is part of the transportation industry. Shares are up 19.1% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Capital Product Partners L.P as a hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. 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 disappointing return on equity.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 89.60% to $29.23 million when compared to the same quarter last year. In addition, CAPITAL PRODUCT PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of 29.07%.
  • The gross profit margin for CAPITAL PRODUCT PARTNERS LP is rather high; currently it is at 68.40%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -91.38% is in-line with the industry average.
  • CPLP, with its decline in revenue, slightly underperformed the industry average of 3.0%. Since the same quarter one year prior, revenues fell by 12.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 3472.5% when compared to the same quarter one year ago, falling from $1.04 million to -$35.01 million.
  • 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, CAPITAL PRODUCT PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.

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Hugoton Royalty

Dividend Yield: 10.40%

Hugoton Royalty (NYSE: HGT) shares currently have a dividend yield of 10.40%.

Hugoton Royalty Trust operates as an express trust in the United States. The company holds an 80% net profits interests in certain natural gas producing working interest properties of XTO Energy Inc. XTO Energy Inc. The company has a P/E ratio of 13.60. Currently there are no analysts that rate Hugoton Royalty a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Hugoton Royalty has been 178,900 shares per day over the past 30 days. Hugoton Royalty has a market cap of $315.6 million and is part of the energy industry. Shares are up 10% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Hugoton Royalty as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, 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:
  • HGT 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 510.11, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for HUGOTON ROYALTY TRUST is currently very high, coming in at 100.00%. HGT has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, HGT's net profit margin of 44.50% significantly outperformed against the industry.
  • HGT, with its very weak revenue results, has greatly underperformed against the industry average of 3.0%. Since the same quarter one year prior, revenues plummeted by 68.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • HUGOTON ROYALTY TRUST has exprienced 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 suffered a declining pattern earnings per share over the past two years. During the past fiscal year, HUGOTON ROYALTY TRUST reported lower earnings of $1.40 versus $1.55 in the prior year.
  • 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 86.0% when compared to the same quarter one year ago, falling from $15.33 million to $2.15 million.

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Gladstone Commercial Corporation

Dividend Yield: 7.90%

Gladstone Commercial Corporation (NASDAQ: GOOD) shares currently have a dividend yield of 7.90%.

Gladstone Commercial Corporation operates as a real estate investment trust (REIT) in the United States. It engages in investing in and owning net leased industrial and commercial real properties, and making long-term industrial and commercial mortgage loans. Currently there are 2 analysts that rate Gladstone Commercial Corporation a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Gladstone Commercial Corporation has been 40,200 shares per day over the past 30 days. Gladstone Commercial Corporation has a market cap of $212.0 million and is part of the real estate industry. Shares are up 5.8% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Gladstone Commercial Corporation as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and increase in stock price during the past year. 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 disappointing return on equity.

Highlights from the ratings report include:
  • GOOD's revenue growth has slightly outpaced the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 20.2%. 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.
  • 49.50% is the gross profit margin for GLADSTONE COMMERCIAL CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, GOOD's net profit margin of 4.45% significantly trails the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, GLADSTONE COMMERCIAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $4.78 million or 9.18% 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.

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Horizon Technology Finance Corp BDC

Dividend Yield: 9.30%

Horizon Technology Finance Corp BDC (NASDAQ: HRZN) shares currently have a dividend yield of 9.30%.

Horizon Technology Finance Corporation, a specialty finance company, lends to and invests in development-stage companies in the United States. The company has a P/E ratio of 10.48. Currently there are 3 analysts that rate Horizon Technology Finance Corp BDC a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Horizon Technology Finance Corp BDC has been 72,700 shares per day over the past 30 days. Horizon Technology Finance Corp BDC has a market cap of $141.5 million and is part of the financial services industry. Shares are down 0.7% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Horizon Technology Finance Corp BDC as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.0%. Since the same quarter one year prior, revenues slightly increased by 2.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for HORIZON TECHNOLOGY FINANCE is rather high; currently it is at 61.30%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 55.08% significantly outperformed against the industry average.
  • HORIZON TECHNOLOGY FINANCE has improved earnings per share by 11.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, HORIZON TECHNOLOGY FINANCE increased its bottom line by earning $1.44 versus $0.60 in the prior year. For the next year, the market is expecting a contraction of 2.8% in earnings ($1.40 versus $1.44).
  • Net operating cash flow has significantly decreased to -$17.50 million or 286.24% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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. When compared to other companies in the Capital Markets industry and the overall market, HORIZON TECHNOLOGY FINANCE's return on equity is below that of both the industry average and the S&P 500.

New From TheStreet: Jim Cramer's Protégé, Dave Peltier, only buys dividend stocks that have the potential for a 3% to 4% yield and 10% growth. Get his best picks for less than $50/year.

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Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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