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: 11.80%

Capital Product Partners L.P (NASDAQ: CPLP) shares currently have a dividend yield of 11.80%.

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 219,400 shares per day over the past 30 days. Capital Product Partners L.P has a market cap of $547.3 million and is part of the transportation industry. Shares are up 24.3% year to date as of the close of trading on Friday.

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 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:
  • 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 29.14%.
  • 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.
  • 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.
  • CAPITAL PRODUCT PARTNERS LP 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. During the past fiscal year, CAPITAL PRODUCT PARTNERS LP swung to a loss, reporting -$0.45 versus $1.98 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 3472.5% when compared to the same quarter one year ago, falling from $1.04 million to -$35.01 million.

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Pzena Investment Management

Dividend Yield: 9.00%

Pzena Investment Management (NYSE: PZN) shares currently have a dividend yield of 9.00%.

Pzena Investment Management, Inc. is a publicly owned investment manager. The company has a P/E ratio of 22.28. Currently there is 1 analyst that rates Pzena Investment Management a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Pzena Investment Management has been 22,400 shares per day over the past 30 days. Pzena Investment Management has a market cap of $78.8 million and is part of the financial services industry. Shares are up 25.9% year to date as of the close of trading on Friday.

TheStreet Ratings rates Pzena Investment Management as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share and increase in net income. 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:
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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.
  • PZENA INVESTMENT MANAGEMENT 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, PZENA INVESTMENT MANAGEMENT increased its bottom line by earning $0.32 versus $0.28 in the prior year. This year, the market expects an improvement in earnings ($0.37 versus $0.32).
  • 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 Capital Markets industry and the overall market, PZENA INVESTMENT MANAGEMENT's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 49.00% is the gross profit margin for PZENA INVESTMENT MANAGEMENT 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, PZN's net profit margin of 4.95% significantly trails the industry average.

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Deswell Industries

Dividend Yield: 7.70%

Deswell Industries (NASDAQ: DSWL) shares currently have a dividend yield of 7.70%.

Deswell Industries, Inc. engages in the manufacture and sale of injection-molded plastic parts and components, electronic products and subassemblies, and metallic molds and accessory parts for original equipment manufacturers and contract manufacturers. Currently there are no analysts that rate Deswell Industries a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Deswell Industries has been 11,800 shares per day over the past 30 days. Deswell Industries has a market cap of $42.6 million and is part of the consumer non-durables industry. Shares are up 7.9% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Deswell Industries 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, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and poor profit margins.

Highlights from the ratings report include:
  • DSWL 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 5.04, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has significantly increased by 74.53% to $5.61 million when compared to the same quarter last year. In addition, DESWELL INDUSTRIES INC has also vastly surpassed the industry average cash flow growth rate of 10.05%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite 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.
  • The gross profit margin for DESWELL INDUSTRIES INC is rather low; currently it is at 19.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.60% trails that of 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 Chemicals industry. The net income has significantly decreased by 342.9% when compared to the same quarter one year ago, falling from $0.09 million to -$0.22 million.

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.

North European Oil Royalty

Dividend Yield: 9.50%

North European Oil Royalty (NYSE: NRT) shares currently have a dividend yield of 9.50%.

North European Oil Royalty Trust, a grantor trust, holds overriding royalty rights covering gas and oil production in concessions or leases in the Federal Republic of Germany. It holds these rights under contracts with German exploration and development subsidiaries of ExxonMobil Corp. The company has a P/E ratio of 10.40.

The average volume for North European Oil Royalty has been 17,300 shares per day over the past 30 days. North European Oil Royalty has a market cap of $229.3 million and is part of the financial services industry. Shares are up 11.3% year to date as of the close of trading on Friday.

TheStreet Ratings rates North European Oil Royalty as a hold.

Highlights from the ratings report include:
  • NRT, with its decline in revenue, slightly underperformed the industry average of 2.9%. Since the same quarter one year prior, revenues fell by 11.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, NRT has underperformed the S&P 500 Index, declining 22.52% from its price level of one year ago. 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.
  • NORTH EUROPEAN OIL RTY TR's earnings per share declined by 10.6% in the most recent quarter compared to 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, NORTH EUROPEAN OIL RTY TR reported lower earnings of $2.46 versus $2.63 in the prior year.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry average. The net income has decreased by 10.0% when compared to the same quarter one year ago, dropping from $6.08 million to $5.47 million.

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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