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."

Verizon Communications

Dividend Yield: 4.30%

Verizon Communications (NYSE: VZ) shares currently have a dividend yield of 4.30%.

Verizon Communications Inc., through its subsidiaries, provides communications, information and entertainment products and services to consumers, businesses, and governmental agencies worldwide. The company has a P/E ratio of 154.90. Currently there are 14 analysts that rate Verizon Communications a buy, no analysts rate it a sell, and 13 rate it a hold.

The average volume for Verizon Communications has been 13,820,700 shares per day over the past 30 days. Verizon Communications has a market cap of $137.3 billion and is part of the telecommunications industry. Shares are up 12.7% year to date as of the close of trading on Monday.

TheStreet Ratings rates Verizon Communications as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • VZ's revenue growth has slightly outpaced the industry average of 1.3%. Since the same quarter one year prior, revenues slightly increased by 5.7%. 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 gross profit margin for VERIZON COMMUNICATIONS INC is rather high; currently it is at 57.70%. It has increased from the same quarter the previous year.
  • 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 Diversified Telecommunication Services industry and the overall market on the basis of return on equity, VERIZON COMMUNICATIONS INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Net operating cash flow has decreased to $6,728.00 million or 18.62% 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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Washington REIT

Dividend Yield: 4.30%

Washington REIT (NYSE: WRE) shares currently have a dividend yield of 4.30%.

Washington Real Estate Investment Trust is an equity real estate investment trust (REIT). The company engages in the ownership, operation, and development of real properties. The firm invests in real estate markets of the greater Washington D.C. metro region. The company has a P/E ratio of 110.44. Currently there are no analysts that rate Washington REIT a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Washington REIT has been 552,100 shares per day over the past 30 days. Washington REIT has a market cap of $1.8 billion and is part of the real estate industry. Shares are up 4.5% year to date as of the close of trading on Monday.

TheStreet Ratings rates Washington REIT as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, revenue growth 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, deteriorating net income and poor profit margins.

Highlights from the ratings report include:
  • WASHINGTON REIT reported significant earnings per share improvement 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 two years. During the past fiscal year, WASHINGTON REIT turned its bottom line around by earning $0.27 versus -$0.06 in the prior year.
  • WRE's revenue growth trails the industry average of 16.4%. Since the same quarter one year prior, revenues slightly increased by 2.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $38.34 million or 21.83% when compared to the same quarter last year. Despite an increase in cash flow, WASHINGTON REIT's cash flow growth rate is still lower than the industry average growth rate of 32.95%.
  • 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 90.3% when compared to the same quarter one year ago, falling from $30.38 million to $2.94 million.
  • WRE has underperformed the S&P 500 Index, declining 6.51% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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Regal Entertainment Group

Dividend Yield: 5.30%

Regal Entertainment Group (NYSE: RGC) shares currently have a dividend yield of 5.30%.

Regal Entertainment Group, through its subsidiaries, operates as a motion picture exhibitor in the United States. The company develops, acquires, and operates multi-screen theatres primarily in mid-sized metropolitan markets and suburban growth areas of larger metropolitan markets. The company has a P/E ratio of 17.15. Currently there are 7 analysts that rate Regal Entertainment Group a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Regal Entertainment Group has been 1,390,400 shares per day over the past 30 days. Regal Entertainment Group has a market cap of $2.1 billion and is part of the media industry. Shares are up 14.3% year to date as of the close of trading on Monday.

TheStreet Ratings rates Regal Entertainment Group as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • RGC's revenue growth has slightly outpaced the industry average of 8.4%. Since the same quarter one year prior, revenues rose by 17.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
  • Net operating cash flow has increased to $164.90 million or 24.07% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -6.27%.
  • The gross profit margin for REGAL ENTERTAINMENT GROUP is rather low; currently it is at 21.80%. Regardless of RGC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.15% trails the industry average.

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.

Exelon

Dividend Yield: 6.30%

Exelon (NYSE: EXC) shares currently have a dividend yield of 6.30%.

Exelon Corporation, a utility services holding company, engages in the energy generation and distribution business in the United States. The company has a P/E ratio of 23.51. Currently there are 3 analysts that rate Exelon a buy, no analysts rate it a sell, and 14 rate it a hold.

The average volume for Exelon has been 7,750,900 shares per day over the past 30 days. Exelon has a market cap of $28.6 billion and is part of the utilities industry. Shares are up 12.3% year to date as of the close of trading on Monday.

TheStreet Ratings rates Exelon as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth 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:
  • The revenue growth came in higher than the industry average of 14.8%. Since the same quarter one year prior, revenues rose by 44.2%. 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.
  • The debt-to-equity ratio is somewhat low, currently at 0.90, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that EXC's debt-to-equity ratio is low, the quick ratio, which is currently 0.57, displays a potential problem in covering short-term cash needs.
  • EXELON CORP 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 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, EXELON CORP reported lower earnings of $1.40 versus $3.75 in the prior year. This year, the market expects an improvement in earnings ($2.50 versus $1.40).
  • The gross profit margin for EXELON CORP is rather low; currently it is at 20.80%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 6.01% trails that of the industry average.
  • Net operating cash flow has decreased to $1,574.00 million or 18.69% 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.

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.

Vanguard Natural Resources

Dividend Yield: 8.50%

Vanguard Natural Resources (NYSE: VNR) shares currently have a dividend yield of 8.50%.

Vanguard Natural Resources, LLC, through its subsidiaries, engages in the acquisition and development of oil and natural gas properties in the United States. Currently there are 9 analysts that rate Vanguard Natural Resources a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Vanguard Natural Resources has been 523,200 shares per day over the past 30 days. Vanguard Natural Resources has a market cap of $1.9 billion and is part of the energy industry. Shares are up 8.9% year to date as of the close of trading on Monday.

TheStreet Ratings rates Vanguard Natural Resources as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • VNR's very impressive revenue growth greatly exceeded the industry average of 3.0%. Since the same quarter one year prior, revenues leaped by 404.3%. 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.
  • In its most recent trading session, VNR 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. 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.
  • VANGUARD NATURAL RESOURCES 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 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, VANGUARD NATURAL RESOURCES swung to a loss, reporting -$2.76 versus $2.12 in the prior year. This year, the market expects an improvement in earnings ($1.42 versus -$2.76).
  • 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, VANGUARD NATURAL RESOURCES'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 $45.33 million or 4.00% 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.

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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