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: 10.30%

Capital Product Partners L.P (NASDAQ: CPLP) shares currently have a dividend yield of 10.30%.

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 217,000 shares per day over the past 30 days. Capital Product Partners L.P has a market cap of $623.7 million and is part of the transportation industry. Shares are up 36.6% year to date as of the close of trading on Friday.

TheStreet Ratings rates Capital Product Partners L.P as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • CPLP's revenue growth has slightly outpaced the industry average of 6.7%. Since the same quarter one year prior, revenues slightly increased by 0.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for CAPITAL PRODUCT PARTNERS LP is rather high; currently it is at 63.90%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 62.58% significantly outperformed against the industry average.
  • 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.
  • Net operating cash flow has decreased to $17.88 million or 10.01% when compared to the same quarter last year. Despite a decrease in cash flow CAPITAL PRODUCT PARTNERS LP is still fairing well by exceeding its industry average cash flow growth rate of -23.86%.
  • 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 4.89.

The average volume for Ellington Financial has been 126,900 shares per day over the past 30 days. Ellington Financial has a market cap of $529.3 million and is part of the real estate industry. Shares are up 15.3% year to date as of the close of trading on Friday.

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 5.3%. 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.

QR Energy

Dividend Yield: 11.00%

QR Energy (NYSE: QRE) shares currently have a dividend yield of 11.00%.

QR Energy, LP, through its subsidiary, QRE Operating, LLC, engages in the acquisition, exploitation, development, and production of oil and natural gas properties in the United States. The company has a P/E ratio of 93.42.

The average volume for QR Energy has been 400,900 shares per day over the past 30 days. QR Energy has a market cap of $1.0 billion and is part of the energy industry. Shares are up 6% year to date as of the close of trading on Friday.

TheStreet Ratings rates QR Energy as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and generally higher debt management risk.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.7%. Since the same quarter one year prior, revenues slightly increased by 4.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • QR ENERGY LP 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, QR ENERGY LP increased its bottom line by earning $0.54 versus $0.35 in the prior year. This year, the market expects an improvement in earnings ($1.25 versus $0.54).
  • The gross profit margin for QR ENERGY LP is rather high; currently it is at 59.10%. 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 1.98% trails the industry average.
  • 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, QR ENERGY LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • In its most recent trading session, QRE has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

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.

Dominion Resources Black Warrior

Dividend Yield: 13.00%

Dominion Resources Black Warrior (NYSE: DOM) shares currently have a dividend yield of 13.00%.

Dominion Resources Black Warrior Trust operates as a grantor trust in the United States. The company has a P/E ratio of 9.17.

The average volume for Dominion Resources Black Warrior has been 37,800 shares per day over the past 30 days. Dominion Resources Black Warrior has a market cap of $38.9 million and is part of the financial services industry. Shares are up 69.8% year to date as of the close of trading on Friday.

TheStreet Ratings rates Dominion Resources Black Warrior 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 feeble growth in the company's earnings per share, deteriorating net income and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • DOM 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 92.70, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for DOMINION RES BLACK WARRIOR is currently very high, coming in at 100.00%. DOM has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, DOM's net profit margin of 81.10% significantly outperformed against the industry.
  • DOM, with its decline in revenue, underperformed when compared the industry average of 6.7%. Since the same quarter one year prior, revenues fell by 36.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • DOMINION RES BLACK WARRIOR's earnings per share declined by 39.1% 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. During the past fiscal year, DOMINION RES BLACK WARRIOR reported lower earnings of $0.54 versus $0.93 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 41.8% when compared to the same quarter one year ago, falling from $1.84 million to $1.07 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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