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."

American Capital Agency

Dividend Yield: 15.30%

American Capital Agency (NASDAQ: AGNC) shares currently have a dividend yield of 15.30%.

American Capital Agency Corp. operates as a real estate investment trust (REIT). The company has a P/E ratio of 7.84. Currently there are 7 analysts that rate American Capital Agency a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for American Capital Agency has been 5,868,500 shares per day over the past 30 days. American Capital Agency has a market cap of $13.0 billion and is part of the real estate industry. Shares are up 13.1% year to date as of the close of trading on Wednesday.

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

Highlights from the ratings report include:
  • AGNC's very impressive revenue growth greatly exceeded the industry average of 16.4%. Since the same quarter one year prior, revenues leaped by 98.7%. 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. 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.
  • AMERICAN CAPITAL AGENCY CORP 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, AMERICAN CAPITAL AGENCY CORP reported lower earnings of $4.40 versus $5.22 in the prior year. For the next year, the market is expecting a contraction of 2.0% in earnings ($4.31 versus $4.40).
  • 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, AMERICAN CAPITAL AGENCY CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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Cablevision Systems

Dividend Yield: 4.10%

Cablevision Systems (NYSE: CVC) shares currently have a dividend yield of 4.10%.

Cablevision Systems Corporation provides telecommunications and media services. It operates in two segments, Telecommunications Services and Other. The company has a P/E ratio of 122.08. Currently there are 3 analysts that rate Cablevision Systems a buy, 3 analysts rate it a sell, and 5 rate it a hold.

The average volume for Cablevision Systems has been 3,737,100 shares per day over the past 30 days. Cablevision Systems has a market cap of $3.1 billion and is part of the media industry. Shares are down 4.3% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Cablevision Systems as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including relatively poor performance when compared with the S&P 500 during the past year and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 92.2% when compared to the same quarter one year prior, rising from $60.63 million to $116.54 million.
  • Net operating cash flow has slightly increased to $533.19 million or 6.88% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -6.08%.
  • 45.20% is the gross profit margin for CABLEVISION SYS CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.00% trails the industry average.
  • CABLEVISION SYS 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, CABLEVISION SYS CORP reported lower earnings of $0.13 versus $0.84 in the prior year. This year, the market expects an improvement in earnings ($0.45 versus $0.13).
  • In its most recent trading session, CVC 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. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.

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Sun Communities

Dividend Yield: 5.20%

Sun Communities (NYSE: SUI) shares currently have a dividend yield of 5.20%.

Sun Communities, Inc. operates as a real estate investment trust (REIT). It owns, operates, and develops manufactured housing communities in the midwestern, southern, and southeastern United States. The company has a P/E ratio of 270.17. Currently there is 1 analyst that rates Sun Communities a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Sun Communities has been 225,100 shares per day over the past 30 days. Sun Communities has a market cap of $1.5 billion and is part of the real estate industry. Shares are up 18.4% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Sun Communities as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth 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:
  • SUI's revenue growth has slightly outpaced the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 19.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • SUN COMMUNITIES INC 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, SUN COMMUNITIES INC turned its bottom line around by earning $0.20 versus -$0.05 in the prior year. This year, the market expects an improvement in earnings ($0.33 versus $0.20).
  • 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. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, SUN COMMUNITIES INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for SUN COMMUNITIES INC is rather low; currently it is at 19.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.44% is significantly below that of the industry average.

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Windstream

Dividend Yield: 12.20%

Windstream (NASDAQ: WIN) shares currently have a dividend yield of 12.20%.

Windstream Corporation provides communications and technology solutions in the United States. The company offers managed services and cloud computing services to businesses, as well as broadband, voice, and video services to consumers primarily in rural markets. The company has a P/E ratio of 29.36. Currently there are 5 analysts that rate Windstream a buy, 2 analysts rate it a sell, and 7 rate it a hold.

The average volume for Windstream has been 8,642,600 shares per day over the past 30 days. Windstream has a market cap of $4.9 billion and is part of the telecommunications industry. Shares are down 0.8% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Windstream 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 also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 1.1%. Since the same quarter one year prior, revenues rose by 27.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the 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 Diversified Telecommunication Services industry and the overall market, WINDSTREAM CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • WINDSTREAM CORP 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, WINDSTREAM CORP reported lower earnings of $0.28 versus $0.33 in the prior year. This year, the market expects an improvement in earnings ($0.45 versus $0.28).
  • WIN'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 31.47%, 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. 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.
  • The debt-to-equity ratio is very high at 8.14 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.36, which clearly demonstrates the inability to cover short-term cash needs.

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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