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."

Freeport-McMoRan Copper & Gold

Dividend Yield: 4.40%

Freeport-McMoRan Copper & Gold (NYSE: FCX) shares currently have a dividend yield of 4.40%.

Freeport-McMoRan Copper & Gold Inc. engages in the exploration of mineral resource properties. The company primarily explores for copper, gold, molybdenum, cobalt, silver, and other metals, such as rhenium and magnetite. The company has a P/E ratio of 9.27.

The average volume for Freeport-McMoRan Copper & Gold has been 16,070,000 shares per day over the past 30 days. Freeport-McMoRan Copper & Gold has a market cap of $27.1 billion and is part of the metals & mining industry. Shares are down 16.6% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Freeport-McMoRan Copper & Gold 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • Net operating cash flow has slightly increased to $831.00 million or 3.74% when compared to the same quarter last year. In addition, FREEPORT-MCMORAN COP&GOLD has also vastly surpassed the industry average cash flow growth rate of -51.84%.
  • Despite currently having a low debt-to-equity ratio of 0.56, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.47 is very high and demonstrates very strong liquidity.
  • FREEPORT-MCMORAN COP&GOLD's earnings per share declined by 15.0% in the most recent quarter compared to 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, FREEPORT-MCMORAN COP&GOLD reported lower earnings of $3.18 versus $4.77 in the prior year. This year, the market expects an improvement in earnings ($4.01 versus $3.18).
  • Looking at the price performance of FCX's shares over the past 12 months, there is not much good news to report: the stock is down 26.75%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.

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Regal Entertainment Group

Dividend Yield: 4.90%

Regal Entertainment Group (NYSE: RGC) shares currently have a dividend yield of 4.90%.

Regal Entertainment Group, through its subsidiaries, operates as a motion picture exhibitor in the United States. The company develops, acquires, and operates multi-screen theatres primarily in mid-sized metropolitan markets and suburban growth areas of larger metropolitan markets. The company has a P/E ratio of 18.57.

The average volume for Regal Entertainment Group has been 1,016,800 shares per day over the past 30 days. Regal Entertainment Group has a market cap of $2.3 billion and is part of the media industry. Shares are up 24.4% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Regal Entertainment Group as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. 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:
  • RGC's revenue growth has slightly outpaced the industry average of 8.4%. Since the same quarter one year prior, revenues rose by 17.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 700.00% and other important driving factors, this stock has surged by 25.54% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although RGC had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • Net operating cash flow has increased to $164.90 million or 24.07% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -6.20%.
  • The gross profit margin for REGAL ENTERTAINMENT GROUP is rather low; currently it is at 21.80%. Regardless of RGC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.15% trails 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.

Six Flags Entertainment

Dividend Yield: 4.70%

Six Flags Entertainment (NYSE: SIX) shares currently have a dividend yield of 4.70%.

Six Flags Entertainment Corporation owns and operates regional theme, water, and zoological parks. The company's parks offer various state-of-the-art and traditional thrill rides, water attractions, themed areas, concerts and shows, restaurants, game venues, and retail outlets. The company has a P/E ratio of 10.81.

The average volume for Six Flags Entertainment has been 506,000 shares per day over the past 30 days. Six Flags Entertainment has a market cap of $3.8 billion and is part of the leisure industry. Shares are up 22.4% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Six Flags Entertainment as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and solid stock price performance. 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:
  • The revenue growth came in higher than the industry average of 3.0%. Since the same quarter one year prior, revenues rose by 31.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 41.70% and other important driving factors, this stock has surged by 67.59% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although SIX had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • SIX FLAGS ENTERTAINMENT CORP has improved earnings per share by 41.7% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, SIX FLAGS ENTERTAINMENT CORP turned its bottom line around by earning $6.08 versus -$0.50 in the prior year. For the next year, the market is expecting a contraction of 61.4% in earnings ($2.35 versus $6.08).
  • The debt-to-equity ratio is very high at 3.31 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.

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: 8.60%

BGC Partners (NASDAQ: BGCP) shares currently have a dividend yield of 8.60%.

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 35.06.

The average volume for BGC Partners has been 2,274,300 shares per day over the past 30 days. BGC Partners has a market cap of $725.0 million and is part of the financial services industry. Shares are up 62.1% year to date as of the close of trading on Tuesday.

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 good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including poor profit margins 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 4.8%. 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 ($0.57 versus $0.16).
  • BGCP has underperformed the S&P 500 Index, declining 18.19% from its price level of one year ago. 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 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% trails 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.

Exelon

Dividend Yield: 5.70%

Exelon (NYSE: EXC) shares currently have a dividend yield of 5.70%.

Exelon Corporation, a utility services holding company, engages in the energy generation and distribution business in the United States. The company has a P/E ratio of 25.82.

The average volume for Exelon has been 7,022,700 shares per day over the past 30 days. Exelon has a market cap of $31.4 billion and is part of the utilities industry. Shares are up 24% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Exelon as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 13.2%. Since the same quarter one year prior, revenues rose by 44.2%. 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.
  • The debt-to-equity ratio is somewhat low, currently at 0.90, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that EXC's debt-to-equity ratio is low, the quick ratio, which is currently 0.57, displays a potential problem in covering short-term cash needs.
  • EXELON 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, EXELON CORP reported lower earnings of $1.40 versus $3.75 in the prior year. This year, the market expects an improvement in earnings ($2.49 versus $1.40).
  • The gross profit margin for EXELON CORP is rather low; currently it is at 20.80%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 6.01% trails that of the industry average.
  • Net operating cash flow has decreased to $1,574.00 million or 18.69% 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.

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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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