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."

NTELOS Holdings

Dividend Yield: 12.10%

NTELOS Holdings (NASDAQ: NTLS) shares currently have a dividend yield of 12.10%.

NTELOS Holdings Corp., through its subsidiaries, provides digital wireless communications services to consumers and businesses primarily in Virginia and West Virginia, as well as parts of Maryland, North Carolina, Pennsylvania, Ohio, and Kentucky. The company has a P/E ratio of 16.20.

The average volume for NTELOS Holdings has been 170,600 shares per day over the past 30 days. NTELOS Holdings has a market cap of $298.7 million and is part of the telecommunications industry. Shares are up 6.3% year to date as of the close of trading on Monday.

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

Highlights from the ratings report include:
  • NTLS's revenue growth has slightly outpaced the industry average of 1.4%. Since the same quarter one year prior, revenues rose by 10.8%. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Wireless Telecommunication Services industry. The net income increased by 100.5% when compared to the same quarter one year prior, rising from -$60.54 million to $0.32 million.
  • The debt-to-equity ratio is very high at 11.10 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, NTLS has managed to keep a strong quick ratio of 2.01, which demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for NTELOS HOLDINGS CORP is currently lower than what is desirable, coming in at 26.90%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.27% significantly trails the industry average.

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Marine Petroleum

Dividend Yield: 9.20%

Marine Petroleum (NASDAQ: MARPS) shares currently have a dividend yield of 9.20%.

Marine Petroleum Trust, through its subsidiary, Marine Petroleum Corporation, operates as a royalty trust in the United States. The company has a P/E ratio of 9.48.

The average volume for Marine Petroleum has been 2,700 shares per day over the past 30 days. Marine Petroleum has a market cap of $29.0 million and is part of the financial services industry. Shares are up 5.1% year to date as of the close of trading on Monday.

TheStreet Ratings rates Marine Petroleum 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, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • MARPS 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 MARINE PETROLEUM TRUST is currently very high, coming in at 100.00%. MARPS has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, MARPS's net profit margin of 95.41% significantly outperformed against the industry.
  • MARINE PETROLEUM TRUST's earnings per share declined by 38.8% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, MARINE PETROLEUM TRUST increased its bottom line by earning $1.92 versus $1.59 in the prior year.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 46.24%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 38.77% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • 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 38.0% when compared to the same quarter one year ago, falling from $0.97 million to $0.60 million.

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New Mountain Finance

Dividend Yield: 9.80%

New Mountain Finance (NYSE: NMFC) shares currently have a dividend yield of 9.80%.

New Mountain Finance Corporation operates as a closed-end, non-diversified management investment company.

The average volume for New Mountain Finance has been 309,800 shares per day over the past 30 days. New Mountain Finance has a market cap of $338.3 million and is part of the conglomerates industry. Shares are down 1.3% year to date as of the close of trading on Monday.

TheStreet Ratings rates New Mountain Finance as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and notable return on equity. 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 greatly exceeded the industry average of 4.8%. Since the same quarter one year prior, revenues rose by 44.3%. 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 gross profit margin for NEW MOUNTAIN FINANCE CORP is rather high; currently it is at 66.00%. Regardless of NMFC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NMFC's net profit margin of 68.78% significantly outperformed against the industry.
  • 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 on the basis of return on equity, NEW MOUNTAIN FINANCE CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • The change in net income from the same quarter one year ago has exceeded that of the Capital Markets industry average, but is less than that of the S&P 500. The net income has decreased by 4.8% when compared to the same quarter one year ago, dropping from $17.86 million to $17.00 million.
  • Net operating cash flow has significantly decreased to -$128.89 million or 100.62% when compared to the same quarter last year. Despite a decrease in cash flow NEW MOUNTAIN FINANCE CORP is still fairing well by exceeding its industry average cash flow growth rate of -113.26%.

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Deswell Industries

Dividend Yield: 7.80%

Deswell Industries (NASDAQ: DSWL) shares currently have a dividend yield of 7.80%.

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.

The average volume for Deswell Industries has been 17,100 shares per day over the past 30 days. Deswell Industries has a market cap of $41.9 million and is part of the consumer non-durables industry. Shares are up 6.3% year to date as of the close of trading on Monday.

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 notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself.

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 -2.66%.
  • DESWELL INDUSTRIES INC 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. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, DESWELL INDUSTRIES INC continued to lose money by earning -$0.09 versus -$0.50 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 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.
  • 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% 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.

Mid-Con Energy Partners

Dividend Yield: 8.70%

Mid-Con Energy Partners (NASDAQ: MCEP) shares currently have a dividend yield of 8.70%.

Mid-Con Energy Partners, LP engages in the acquisition, exploitation, development, and production of oil and natural gas properties in North America. The company has a P/E ratio of 14.12.

The average volume for Mid-Con Energy Partners has been 77,500 shares per day over the past 30 days. Mid-Con Energy Partners has a market cap of $439.8 million and is part of the energy industry. Shares are up 22.3% year to date as of the close of trading on Monday.

TheStreet Ratings rates Mid-Con Energy Partners as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, robust revenue growth and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

Highlights from the ratings report include:
  • Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MID-CON ENERGY PARTNERS -LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • MCEP's very impressive revenue growth greatly exceeded the industry average of 1.3%. Since the same quarter one year prior, revenues leaped by 269.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has slightly increased to $9.93 million or 3.90% when compared to the same quarter last year. Despite an increase in cash flow, MID-CON ENERGY PARTNERS -LP's cash flow growth rate is still lower than the industry average growth rate of 26.66%.
  • 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. 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 debt-to-equity ratio of 1.08 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, MCEP's quick ratio is somewhat strong at 1.46, demonstrating the ability to handle short-term liquidity 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.

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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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