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."

Solar Capital

Dividend Yield: 10.00%

Solar Capital (NASDAQ: SLRC) shares currently have a dividend yield of 10.00%.

Solar Capital Ltd. is a business development company specializing in investments in leveraged middle market companies. The company has a P/E ratio of 7.68.

The average volume for Solar Capital has been 359,100 shares per day over the past 30 days. Solar Capital has a market cap of $1.1 billion and is part of the financial services industry. Shares are down 0.1% year to date as of the close of trading on Tuesday.

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 4.7%. 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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NuStar GP Holdings

Dividend Yield: 7.10%

NuStar GP Holdings (NYSE: NSH) shares currently have a dividend yield of 7.10%.

NuStar GP Holdings, LLC owns general partner and limited partner interests in NuStar Energy L.P. that engages in the terminalling and storage of petroleum products, transportation of petroleum products and anhydrous ammonia, and petroleum refining and marketing. The company has a P/E ratio of 610.60.

The average volume for NuStar GP Holdings has been 133,900 shares per day over the past 30 days. NuStar GP Holdings has a market cap of $1.3 billion and is part of the energy industry. Shares are up 10% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates NuStar GP Holdings as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • NSH's revenue growth has slightly outpaced the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 3.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Net operating cash flow has increased to $11.67 million or 42.32% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.00%.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Oil, Gas & Consumable Fuels industry average. The net income increased by 0.3% when compared to the same quarter one year prior, going from $11.05 million to $11.08 million.
  • NUSTAR GP HOLDINGS LLC reported flat earnings per share in the most recent quarter. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, NUSTAR GP HOLDINGS LLC reported lower earnings of $0.05 versus $1.64 in the prior year. This year, the market expects an improvement in earnings ($1.47 versus $0.05).
  • NSH has underperformed the S&P 500 Index, declining 5.60% from its price level of one year ago. 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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BlackRock Kelso Capital Corporation

Dividend Yield: 10.50%

BlackRock Kelso Capital Corporation (NASDAQ: BKCC) shares currently have a dividend yield of 10.50%.

BlackRock Kelso Capital Corporation is a private equity firm specializing in investments in middle market companies. The firm invests in all industries. The company has a P/E ratio of 12.72.

The average volume for BlackRock Kelso Capital Corporation has been 716,600 shares per day over the past 30 days. BlackRock Kelso Capital Corporation has a market cap of $733.7 million and is part of the financial services industry. Shares are down 1.4% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates BlackRock Kelso Capital Corporation as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • BKCC's revenue growth has slightly outpaced the industry average of 4.7%. Since the same quarter one year prior, revenues slightly increased by 5.3%. 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.
  • Net operating cash flow has significantly increased by 304.29% to $61.76 million when compared to the same quarter last year. In addition, BLACKROCK KELSO CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of -121.89%.
  • 36.00% is the gross profit margin for BLACKROCK KELSO CAPITAL CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.59% trails the industry average.
  • 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 Capital Markets industry and the overall market on the basis of return on equity, BLACKROCK KELSO CAPITAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • 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 75.3% when compared to the same quarter one year ago, falling from $7.05 million to $1.74 million.

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Rhino Resource Partners

Dividend Yield: 12.20%

Rhino Resource Partners (NYSE: RNO) shares currently have a dividend yield of 12.20%.

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 10.30.

The average volume for Rhino Resource Partners has been 58,300 shares per day over the past 30 days. Rhino Resource Partners has a market cap of $224.5 million and is part of the metals & mining industry. Shares are up 6.7% year to date as of the close of trading on Tuesday.

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 0.00%.
  • 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.

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Crosstex Energy

Dividend Yield: 7.30%

Crosstex Energy (NASDAQ: XTEX) shares currently have a dividend yield of 7.30%.

Crosstex Energy, L.P. operates as an independent midstream energy company.

The average volume for Crosstex Energy has been 550,200 shares per day over the past 30 days. Crosstex Energy has a market cap of $1.4 billion and is part of the energy industry. Shares are up 23.5% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Crosstex Energy as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and increase in stock price during the past year. 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 came in higher than the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 9.4%. 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.
  • 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.
  • CROSSTEX ENERGY 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CROSSTEX ENERGY LP reported poor results of -$1.01 versus -$0.38 in the prior year. This year, the market expects an improvement in earnings (-$0.62 versus -$1.01).
  • The gross profit margin for CROSSTEX ENERGY LP is currently extremely low, coming in at 12.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -4.66% is significantly below that of the industry average.
  • Net operating cash flow has declined marginally to $59.32 million or 0.62% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, CROSSTEX ENERGY LP has marginally lower results.

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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