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."

Capital Product Partners L.P

Dividend Yield: 10.80%

Capital Product Partners L.P (NASDAQ: CPLP) shares currently have a dividend yield of 10.80%.

Capital Product Partners L.P., a shipping company, provides marine transportation services in Greece.

The average volume for Capital Product Partners L.P has been 216,600 shares per day over the past 30 days. Capital Product Partners L.P has a market cap of $598.7 million and is part of the transportation industry. Shares are up 31.2% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Capital Product Partners L.P as a hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. 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:
  • Net operating cash flow has significantly increased by 89.60% to $29.23 million when compared to the same quarter last year. In addition, CAPITAL PRODUCT PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of 26.66%.
  • The gross profit margin for CAPITAL PRODUCT PARTNERS LP is rather high; currently it is at 68.40%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -91.38% is in-line with the industry average.
  • CPLP, with its decline in revenue, underperformed when compared the industry average of 1.3%. Since the same quarter one year prior, revenues fell by 12.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 3472.5% when compared to the same quarter one year ago, falling from $1.04 million to -$35.01 million.
  • 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, CAPITAL PRODUCT PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.

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Ellington Financial

Dividend Yield: 11.90%

Ellington Financial (NYSE: EFC) shares currently have a dividend yield of 11.90%.

No company description available. The company has a P/E ratio of 4.87.

The average volume for Ellington Financial has been 128,900 shares per day over the past 30 days. Ellington Financial has a market cap of $527.4 million and is part of the real estate industry. Shares are up 15.5% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Ellington Financial 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 also find weaknesses including weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • EFC's revenue growth has slightly outpaced the industry average of 4.8%. Since the same quarter one year prior, revenues slightly increased by 7.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Capital Markets industry and the overall market, ELLINGTON FINANCIAL LLC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • ELLINGTON FINANCIAL LLC 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ELLINGTON FINANCIAL LLC increased its bottom line by earning $5.32 versus $0.61 in the prior year. For the next year, the market is expecting a contraction of 43.6% in earnings ($3.00 versus $5.32).
  • The gross profit margin for ELLINGTON FINANCIAL LLC is currently lower than what is desirable, coming in at 34.30%. It has decreased significantly from the same period last year. Despite the weak results of the gross profit margin, the net profit margin of 148.82% has significantly outperformed against the industry average.
  • Net operating cash flow has significantly decreased to -$236.70 million or 1511.35% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much 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.

Pzena Investment Management

Dividend Yield: 10.50%

Pzena Investment Management (NYSE: PZN) shares currently have a dividend yield of 10.50%.

Pzena Investment Management, Inc. is a publicly owned investment manager. The company has a P/E ratio of 19.58.

The average volume for Pzena Investment Management has been 32,500 shares per day over the past 30 days. Pzena Investment Management has a market cap of $75.1 million and is part of the financial services industry. Shares are up 13.9% 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 also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.

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 ($0.38 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.
  • 49.10% 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. Regardless of the strong results of the gross profit margin, the net profit margin of 4.95% trails the industry average.
  • PZN has underperformed the S&P 500 Index, declining 5.76% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Net operating cash flow has significantly decreased to -$1.29 million or 176.76% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much 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.

Compressco Partners

Dividend Yield: 7.30%

Compressco Partners (NASDAQ: GSJK) shares currently have a dividend yield of 7.30%.

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 22.64.

The average volume for Compressco Partners has been 15,200 shares per day over the past 30 days. Compressco Partners has a market cap of $215.0 million and is part of the energy industry. Shares are up 39.6% 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, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

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.
  • GSJK's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, GSJK has a quick ratio of 1.54, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has increased to $8.53 million or 18.82% when compared to the same quarter last year. Despite an increase in cash flow, COMPRESSCO PARTNERS LP's average is still marginally south of the industry average growth rate of 28.40%.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Energy Equipment & Services industry and the overall market, COMPRESSCO PARTNERS LP's return on equity is below that of both the industry average and the S&P 500.

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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