5 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 5 stocks with substantial yields, that ultimately, we have rated "Hold."

BP

Dividend Yield: 5.30%

BP (NYSE: BP) shares currently have a dividend yield of 5.30%.

BP p.l.c. provides fuel for transportation, energy for heat and light, lubricants to engines, and petrochemicals products. The company has a P/E ratio of 410.00. Currently there are 7 analysts that rate BP a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for BP has been 7,034,100 shares per day over the past 30 days. BP has a market cap of $130.8 billion and is part of the energy industry. Shares are down 1.3% year to date as of the close of trading on Friday.

TheStreet Ratings rates BP as a hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • Net operating cash flow has increased to $6,340.00 million or 26.54% when compared to the same quarter last year. Despite an increase in cash flow, BP PLC's average is still marginally south of the industry average growth rate of 28.97%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.0%. Since the same quarter one year prior, revenues slightly dropped by 0.6%. 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 78.9% when compared to the same quarter one year ago, falling from $7,685.00 million to $1,618.00 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, BP PLC'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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TECO Energy

Dividend Yield: 5.00%

TECO Energy (NYSE: TE) shares currently have a dividend yield of 5.00%.

TECO Energy, Inc., an electric and gas utility holding company, engages in the regulated electric and gas utility operations. The company has a P/E ratio of 15.30. Currently there are no analysts that rate TECO Energy a buy, 1 analyst rates it a sell, and 11 rate it a hold.

The average volume for TECO Energy has been 1,951,600 shares per day over the past 30 days. TECO Energy has a market cap of $3.8 billion and is part of the utilities industry. Shares are up 4.1% year to date as of the close of trading on Friday.

TheStreet Ratings rates TECO Energy 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 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 80.72% to $149.10 million when compared to the same quarter last year. In addition, TECO ENERGY INC has also vastly surpassed the industry average cash flow growth rate of 12.18%.
  • TE, with its decline in revenue, slightly underperformed the industry average of 3.4%. Since the same quarter one year prior, revenues slightly dropped by 4.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • In its most recent trading session, TE has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • TECO ENERGY INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, TECO ENERGY INC reported lower earnings of $1.13 versus $1.17 in the prior year. For the next year, the market is expecting a contraction of 15.9% in earnings ($0.95 versus $1.13).

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Hatteras Financial Corporation

Dividend Yield: 10.00%

Hatteras Financial Corporation (NYSE: HTS) shares currently have a dividend yield of 10.00%.

Hatteras Financial Corp. operates as an externally-managed mortgage real estate investment trust (REIT). The company has a P/E ratio of 7.60. Currently there are 5 analysts that rate Hatteras Financial Corporation a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Hatteras Financial Corporation has been 834,400 shares per day over the past 30 days. Hatteras Financial Corporation has a market cap of $2.8 billion and is part of the real estate industry. Shares are up 12.1% year to date as of the close of trading on Friday.

TheStreet Ratings rates Hatteras Financial Corporation as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 45.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has increased to $126.14 million or 20.79% when compared to the same quarter last year. Despite an increase in cash flow, HATTERAS FINANCIAL CORP's cash flow growth rate is still lower than the industry average growth rate of 32.95%.
  • In its most recent trading session, HTS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • 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 on the basis of return on equity, HATTERAS FINANCIAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of 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.

Bank of Montreal

Dividend Yield: 4.60%

Bank of Montreal (NYSE: BMO) shares currently have a dividend yield of 4.60%.

Bank of Montreal, together with its subsidiaries, provides various retail banking, wealth management, and investment banking products and services in North America and internationally. The company has a P/E ratio of 10.35. Currently there is 1 analyst that rates Bank of Montreal a buy, 2 analysts rate it a sell, and 5 rate it a hold.

The average volume for Bank of Montreal has been 468,800 shares per day over the past 30 days. Bank of Montreal has a market cap of $41.0 billion and is part of the banking industry. Shares are up 2.6% year to date as of the close of trading on Friday.

TheStreet Ratings rates Bank of Montreal as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, increase in stock price during the past year and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow.

Highlights from the ratings report include:
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Commercial Banks industry and the overall market, BANK OF MONTREAL's return on equity exceeds that of both the industry average and the S&P 500.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The gross profit margin for BANK OF MONTREAL is currently very high, coming in at 83.90%. Regardless of BMO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BMO's net profit margin of 19.64% compares favorably to the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Commercial Banks industry average, but is greater than that of the S&P 500. The net income has decreased by 5.5% when compared to the same quarter one year ago, dropping from $1,090.00 million to $1,030.00 million.
  • Net operating cash flow has significantly decreased to $10,656.00 million or 55.67% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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.

GameStop

Dividend Yield: 4.30%

GameStop (NYSE: GME) shares currently have a dividend yield of 4.30%.

GameStop Corp. operates as a video game retailer. Currently there are 9 analysts that rate GameStop a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for GameStop has been 3,276,600 shares per day over the past 30 days. GameStop has a market cap of $3.1 billion and is part of the retail industry. Shares are up 1.4% year to date as of the close of trading on Friday.

TheStreet Ratings rates GameStop as a hold. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • 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. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • GME 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. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.20 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • The revenue fell significantly faster than the industry average of 27.0%. Since the same quarter one year prior, revenues slightly dropped by 8.9%. 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 Specialty Retail industry. The net income has significantly decreased by 1258.3% when compared to the same quarter one year ago, falling from $53.90 million to -$624.30 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 Specialty Retail industry and the overall market, GAMESTOP CORP's return on equity significantly trails 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.

Other helpful dividend tools from TheStreet:

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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