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."

Pzena Investment Management

Dividend Yield: 11.00%

Pzena Investment Management (NYSE: PZN) shares currently have a dividend yield of 11.00%.

Pzena Investment Management, Inc. is a publicly owned investment manager. The company has a P/E ratio of 18.19. 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 23,000 shares per day over the past 30 days. Pzena Investment Management has a market cap of $64.3 million and is part of the financial services industry. Shares are up 7.6% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Pzena Investment Management as a hold. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income and revenue growth. However, as a counter to these strengths, we find that the stock has experienced relatively poor performance when compared with the S&P 500 during the past year.

Highlights from the ratings report include:
  • 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 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 159.1% when compared to the same quarter one year prior, rising from $0.37 million to $0.96 million.
  • 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.
  • 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.

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Hugoton Royalty

Dividend Yield: 7.90%

Hugoton Royalty (NYSE: HGT) shares currently have a dividend yield of 7.90%.

Hugoton Royalty Trust operates as an express trust in the United States. The company holds an 80% net profits interests in certain natural gas producing working interest properties of XTO Energy Inc. XTO Energy Inc. The company has a P/E ratio of 15.98. Currently there are no analysts that rate Hugoton Royalty a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Hugoton Royalty has been 174,100 shares per day over the past 30 days. Hugoton Royalty has a market cap of $370.8 million and is part of the energy industry. Shares are up 18.7% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Hugoton Royalty 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 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, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • HGT 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.
  • The gross profit margin for HUGOTON ROYALTY TRUST is currently very high, coming in at 100.00%. HGT has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, HGT's net profit margin of 61.73% significantly outperformed against the industry.
  • The revenue fell significantly faster than the industry average of 1.7%. Since the same quarter one year prior, revenues fell by 41.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • HUGOTON ROYALTY TRUST 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, HUGOTON ROYALTY TRUST reported lower earnings of $0.58 versus $1.40 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 63.8% when compared to the same quarter one year ago, falling from $13.09 million to $4.74 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.

Eagle Rock Energy Partners

Dividend Yield: 9.00%

Eagle Rock Energy Partners (NASDAQ: EROC) shares currently have a dividend yield of 9.00%.

Eagle Rock Energy Partners, L.P., together with its subsidiaries, engages in gathering, compressing, treating, processing, transporting, marketing, and trading natural gas, as well as fractionating and transporting natural gas liquids (NGL). Currently there are 3 analysts that rate Eagle Rock Energy Partners a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Eagle Rock Energy Partners has been 512,300 shares per day over the past 30 days. Eagle Rock Energy Partners has a market cap of $1.4 billion and is part of the energy industry. Shares are up 13.2% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Eagle Rock Energy Partners as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and good cash flow from operations. 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:
  • The revenue growth greatly exceeded the industry average of 1.7%. Since the same quarter one year prior, revenues rose by 41.6%. 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.
  • Net operating cash flow has remained constant at $34.50 million with no significant change when compared to the same quarter last year. Despite stable cash flow, EAGLE ROCK ENERGY PARTNRS LP's cash flow growth rate is still lower than the industry average growth rate of 20.23%.
  • EAGLE ROCK ENERGY PARTNRS 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. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, EAGLE ROCK ENERGY PARTNRS LP swung to a loss, reporting -$1.11 versus $0.38 in the prior year. This year, the market expects an improvement in earnings ($0.20 versus -$1.11).
  • 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, EAGLE ROCK ENERGY PARTNRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for EAGLE ROCK ENERGY PARTNRS LP is currently extremely low, coming in at 7.80%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -17.65% is significantly below that of 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.

Compressco Partners

Dividend Yield: 7.90%

Compressco Partners (NASDAQ: GSJK) shares currently have a dividend yield of 7.90%.

Compressco Partners, L.P. provides compression-based production enhancement services for natural gas and oil exploration and production companies. Its production enhancement services are used in both conventional wellhead compression applications and unconventional compression applications. The company has a P/E ratio of 20.73. Currently there is 1 analyst that rates Compressco Partners a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Compressco Partners has been 14,500 shares per day over the past 30 days. Compressco Partners has a market cap of $196.8 million and is part of the energy industry. Shares are up 27.8% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Compressco Partners 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 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 7.8%. Since the same quarter one year prior, revenues rose by 23.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 45.60% is the gross profit margin for COMPRESSCO PARTNERS LP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.11% is above that of the industry average.
  • 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. 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.
  • COMPRESSCO 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, COMPRESSCO PARTNERS LP increased its bottom line by earning $1.05 versus $0.47 in the prior year. This year, the market expects an improvement in earnings ($1.39 versus $1.05).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Energy Equipment & Services industry average. The net income increased by 56.9% when compared to the same quarter one year prior, rising from $3.12 million to $4.90 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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