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."

Arlington Asset Investment

Dividend Yield: 13.60%

Arlington Asset Investment (NYSE: AI) shares currently have a dividend yield of 13.60%.

Arlington Asset Investment Corp., an investment firm, acquires mortgage-related and other assets. The company has a P/E ratio of 1.38. Currently there is 1 analyst that rates Arlington Asset Investment a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Arlington Asset Investment has been 277,400 shares per day over the past 30 days. Arlington Asset Investment has a market cap of $324.2 million and is part of the real estate industry. Shares are up 24.3% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Arlington Asset Investment as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and expanding profit margins. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:
  • AI's very impressive revenue growth greatly exceeded the industry average of 11.3%. Since the same quarter one year prior, revenues leaped by 66.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Capital Markets industry and the overall market, ARLINGTON ASSET INVESTMENT's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • ARLINGTON ASSET INVESTMENT 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ARLINGTON ASSET INVESTMENT increased its bottom line by earning $15.11 versus $1.98 in the prior year. For the next year, the market is expecting a contraction of 73.5% in earnings ($4.01 versus $15.11).
  • Net operating cash flow has decreased to $7.45 million or 16.67% when compared to the same quarter last year. Despite a decrease in cash flow of 16.67%, ARLINGTON ASSET INVESTMENT is still significantly exceeding the industry average of -78.27%.

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Capstead Mortgage Corporation

Dividend Yield: 9.70%

Capstead Mortgage Corporation (NYSE: CMO) shares currently have a dividend yield of 9.70%.

Capstead Mortgage Corporation operates as a self-managed real estate investment trust. The company has a P/E ratio of 8.55. Currently there is 1 analyst that rates Capstead Mortgage Corporation a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Capstead Mortgage Corporation has been 745,800 shares per day over the past 30 days. Capstead Mortgage Corporation has a market cap of $1.2 billion and is part of the real estate industry. Shares are up 11.8% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Capstead Mortgage Corporation as a hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, unimpressive growth in net income and disappointing return on equity.

Highlights from the ratings report include:
  • The gross profit margin for CAPSTEAD MORTGAGE CORP is currently very high, coming in at 94.70%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 57.32% significantly outperformed against the industry average.
  • CMO, with its decline in revenue, underperformed when compared the industry average of 16.4%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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, CAPSTEAD MORTGAGE CORP's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $70.33 million or 13.67% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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Navios Maritime Partners L.P

Dividend Yield: 12.20%

Navios Maritime Partners L.P (NYSE: NMM) shares currently have a dividend yield of 12.20%.

Navios Maritime Partners L.P. engages in the ownership and operation of dry cargo vessels in Europe, Asia, North America, and Australia. The company has a P/E ratio of 8.99. Currently there are 2 analysts that rate Navios Maritime Partners L.P a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Navios Maritime Partners L.P has been 511,200 shares per day over the past 30 days. Navios Maritime Partners L.P has a market cap of $945.3 million and is part of the transportation industry. Shares are up 17.9% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Navios Maritime Partners L.P as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • NMM's revenue growth has slightly outpaced the industry average of 5.2%. Since the same quarter one year prior, revenues slightly increased by 4.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.15, which illustrates the ability to avoid short-term cash problems.
  • NAVIOS MARITIME PARTNERS LP 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, NAVIOS MARITIME PARTNERS LP increased its bottom line by earning $1.64 versus $1.19 in the prior year. For the next year, the market is expecting a contraction of 47.0% in earnings ($0.87 versus $1.64).
  • NMM has underperformed the S&P 500 Index, declining 11.82% 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.

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.

BGC Partners

Dividend Yield: 11.50%

BGC Partners (NASDAQ: BGCP) shares currently have a dividend yield of 11.50%.

BGC Partners, Inc. operates as a brokerage company, primarily servicing the wholesale financial and real estate markets. It operates through two segments, Financial Services and Real Estate Services. The company has a P/E ratio of 26.00. Currently there are 2 analysts that rate BGC Partners a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for BGC Partners has been 1,533,600 shares per day over the past 30 days. BGC Partners has a market cap of $537.6 million and is part of the financial services industry. Shares are up 20.2% year to date as of the close of trading on Thursday.

TheStreet Ratings rates BGC Partners as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins.

Highlights from the ratings report include:
  • BGCP's revenue growth has slightly outpaced the industry average of 11.3%. Since the same quarter one year prior, revenues rose by 21.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 268.9% when compared to the same quarter one year prior, rising from $3.84 million to $14.17 million.
  • BGC PARTNERS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BGC PARTNERS INC reported lower earnings of $0.16 versus $0.19 in the prior year. This year, the market expects an improvement in earnings ($0.61 versus $0.16).
  • The gross profit margin for BGC PARTNERS INC is currently extremely low, coming in at 1.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.29% significantly trails the industry average.
  • BGCP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 43.17%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, BGCP is still more expensive than most of the other companies in its industry.

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.

Dynex Capital

Dividend Yield: 10.90%

Dynex Capital (NYSE: DX) shares currently have a dividend yield of 10.90%.

Dynex Capital, Inc., together with its subsidiaries, operates as a real estate investment trust or REIT in the United States. The company has a P/E ratio of 7.91. Currently there are 2 analysts that rate Dynex Capital a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Dynex Capital has been 404,700 shares per day over the past 30 days. Dynex Capital has a market cap of $579.3 million and is part of the real estate industry. Shares are up 13.1% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Dynex Capital as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and attractive valuation levels. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good.

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 36.8%. 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 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 Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, DYNEX CAPITAL INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • 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.
  • DYNEX CAPITAL INC's earnings per share declined by 5.5% in the most recent quarter compared to 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, DYNEX CAPITAL INC increased its bottom line by earning $1.36 versus $1.05 in the prior year. For the next year, the market is expecting a contraction of 8.1% in earnings ($1.25 versus $1.36).

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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