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."

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 real estate investment trust in the United States. The company has a P/E ratio of 8.51.

The average volume for Capstead Mortgage Corporation has been 771,900 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 11.7% year to date as of the close of trading on Friday.

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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Solar Capital

Dividend Yield: 10.60%

Solar Capital (NASDAQ: SLRC) shares currently have a dividend yield of 10.60%.

Solar Capital Ltd. is a business development company specializing in investments in leveraged middle market companies. The company has a P/E ratio of 7.28.

The average volume for Solar Capital has been 398,500 shares per day over the past 30 days. Solar Capital has a market cap of $1.0 billion and is part of the financial services industry. Shares are down 5.3% year to date as of the close of trading on Friday.

TheStreet Ratings rates Solar Capital as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 4.8%. Since the same quarter one year prior, revenues rose by 15.2%. 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Capital Markets industry and the overall market, SOLAR CAPITAL LTD's return on equity exceeds that of both the industry average and 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.
  • 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 Capital Markets industry. The net income has significantly decreased by 55.1% when compared to the same quarter one year ago, falling from $51.86 million to $23.30 million.
  • Net operating cash flow has significantly decreased to -$213.35 million or 648.11% 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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Consolidated Communications

Dividend Yield: 9.20%

Consolidated Communications (NASDAQ: CNSL) shares currently have a dividend yield of 9.20%.

Consolidated Communications Holdings, Inc., together with its subsidiaries, provides telecommunications services to residential and business customers in Illinois, Texas, Pennsylvania, California, Kansas, and Missouri. The company has a P/E ratio of 112.87.

The average volume for Consolidated Communications has been 171,900 shares per day over the past 30 days. Consolidated Communications has a market cap of $679.1 million and is part of the telecommunications industry. Shares are up 6.4% year to date as of the close of trading on Friday.

TheStreet Ratings rates Consolidated Communications as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and generally higher debt management risk.

Highlights from the ratings report include:
  • CNSL's very impressive revenue growth greatly exceeded the industry average of 1.2%. Since the same quarter one year prior, revenues leaped by 70.9%. 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 increased to $51.32 million or 39.15% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 13.50%.
  • The gross profit margin for CONSOLIDATED COMM HLDGS INC is rather high; currently it is at 61.40%. Regardless of CNSL's high profit margin, it has managed to decrease from the same period last year.
  • 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. When compared to other companies in the Diversified Telecommunication Services industry and the overall market, CONSOLIDATED COMM HLDGS INC's return on equity is below that of both the industry average and the S&P 500.
  • The share price of CONSOLIDATED COMM HLDGS INC has not done very well: it is down 6.36% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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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Gladstone Commercial Corporation

Dividend Yield: 7.60%

Gladstone Commercial Corporation (NASDAQ: GOOD) shares currently have a dividend yield of 7.60%.

Gladstone Commercial Corporation operates as a real estate investment trust (REIT) in the United States. It engages in investing in and owning net leased industrial and commercial real properties, and making long-term industrial and commercial mortgage loans.

The average volume for Gladstone Commercial Corporation has been 40,100 shares per day over the past 30 days. Gladstone Commercial Corporation has a market cap of $223.0 million and is part of the real estate industry. Shares are up 9.8% year to date as of the close of trading on Friday.

TheStreet Ratings rates Gladstone Commercial Corporation as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and solid stock price performance. 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:
  • GOOD's revenue growth has slightly outpaced the industry average of 16.5%. Since the same quarter one year prior, revenues rose by 20.2%. 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.
  • 49.50% is the gross profit margin for GLADSTONE COMMERCIAL CORP 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, GOOD's net profit margin of 4.45% significantly trails the industry average.
  • 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. 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.
  • 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, GLADSTONE COMMERCIAL CORP'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 $4.78 million or 9.18% 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.

Rhino Resource Partners

Dividend Yield: 12.40%

Rhino Resource Partners (NYSE: RNO) shares currently have a dividend yield of 12.40%.

Rhino Resource Partners LP, together with its subsidiaries, produces, processes, and sells various grades of steam and metallurgical coal from surface and underground mines in the United States. The company has a P/E ratio of 10.08.

The average volume for Rhino Resource Partners has been 56,300 shares per day over the past 30 days. Rhino Resource Partners has a market cap of $219.8 million and is part of the metals & mining industry. Shares are up 2.9% year to date as of the close of trading on Friday.

TheStreet Ratings rates Rhino Resource Partners as a hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, feeble growth in the company's earnings per share and poor profit margins.

Highlights from the ratings report include:
  • Net operating cash flow has increased to $21.72 million or 39.21% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 26.66%.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, RHINO RESOURCE PARTNERS LP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • RHINO RESOURCE PARTNERS LP's earnings per share declined by 26.7% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, RHINO RESOURCE PARTNERS LP's EPS of $1.42 remained unchanged from the prior years' EPS of $1.42. For the next year, the market is expecting a contraction of 47.2% in earnings ($0.75 versus $1.42).
  • 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 26.2% when compared to the same quarter one year ago, falling from $12.71 million to $9.38 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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