4 Hold-Rated Dividend Stocks: CYS, RRD, RGC, IEP

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."

CYS Investments

Dividend Yield: 10.60%

CYS Investments (NYSE: CYS) shares currently have a dividend yield of 10.60%.

No company description available. The company has a P/E ratio of 6.40.

The average volume for CYS Investments has been 2,628,400 shares per day over the past 30 days. CYS Investments has a market cap of $2.1 billion and is part of the real estate industry. Shares are up 2.5% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates CYS Investments as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. 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:
  • CYS's revenue growth has slightly outpaced the industry average of 10.1%. Since the same quarter one year prior, revenues rose by 11.8%. 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 gross profit margin for CYS INVESTMENTS INC is currently very high, coming in at 92.40%. 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 -22.16% is in-line with the industry average.
  • CYS INVESTMENTS 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, CYS INVESTMENTS INC reported lower earnings of $2.75 versus $3.63 in the prior year. For the next year, the market is expecting a contraction of 68.0% in earnings ($0.88 versus $2.75).
  • 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 123.4% when compared to the same quarter one year ago, falling from $69.12 million to -$16.20 million.

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R.R. Donnelley & Sons Company

Dividend Yield: 8.30%

R.R. Donnelley & Sons Company (NASDAQ: RRD) shares currently have a dividend yield of 8.30%.

R.R. Donnelley & Sons Company provides integrated communication solutions to private and public sectors worldwide.

The average volume for R.R. Donnelley & Sons Company has been 2,401,100 shares per day over the past 30 days. R.R. Donnelley & Sons Company has a market cap of $2.3 billion and is part of the diversified services industry. Shares are up 37.4% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates R.R. Donnelley & Sons Company 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 disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 10.2%. Since the same quarter one year prior, revenues slightly increased by 0.5%. 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.
  • In its most recent trading session, RRD 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. 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.
  • DONNELLEY (R R) & SONS CO's earnings per share declined by 28.6% 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, DONNELLEY (R R) & SONS CO reported poor results of -$3.61 versus -$0.73 in the prior year. This year, the market expects an improvement in earnings ($1.59 versus -$3.61).
  • The gross profit margin for DONNELLEY (R R) & SONS CO is rather low; currently it is at 22.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.06% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$95.80 million or 84.23% 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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Regal Entertainment Group

Dividend Yield: 4.40%

Regal Entertainment Group (NYSE: RGC) shares currently have a dividend yield of 4.40%.

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 24.24.

The average volume for Regal Entertainment Group has been 1,186,700 shares per day over the past 30 days. Regal Entertainment Group has a market cap of $2.5 billion and is part of the media industry. Shares are up 36.1% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Regal Entertainment Group as a hold. Among the primary strengths of the company is its solid stock price performance. At the same time, however, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, RGC's share price has jumped by 30.22%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • REGAL ENTERTAINMENT GROUP 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 reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, REGAL ENTERTAINMENT GROUP increased its bottom line by earning $0.93 versus $0.27 in the prior year. This year, the market expects an improvement in earnings ($1.00 versus $0.93).
  • RGC, with its decline in revenue, underperformed when compared the industry average of 4.7%. Since the same quarter one year prior, revenues slightly dropped by 6.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Net operating cash flow has declined marginally to $110.90 million or 5.61% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, REGAL ENTERTAINMENT GROUP has marginally lower results.
  • 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 Media industry. The net income has significantly decreased by 51.4% when compared to the same quarter one year ago, falling from $46.30 million to $22.50 million.

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Icahn

Dividend Yield: 4.80%

Icahn (NASDAQ: IEP) shares currently have a dividend yield of 4.80%.

Icahn Enterprises L.P. engages in the investment, automotive, gaming, railcar, food packaging, metals, real estate, and home fashion businesses in the United States and internationally. Its Investment segment provides investment advisory, and administrative and back office services. The company has a P/E ratio of 14.36.

The average volume for Icahn has been 234,900 shares per day over the past 30 days. Icahn has a market cap of $9.1 billion and is part of the automotive industry. Shares are up 85.3% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Icahn as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and disappointing return on equity.

Highlights from the ratings report include:
  • IEP's very impressive revenue growth greatly exceeded the industry average of 0.7%. Since the same quarter one year prior, revenues leaped by 89.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 273.79% and other important driving factors, this stock has surged by 33.62% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • ICAHN ENTERPRISES 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 year. During the past fiscal year, ICAHN ENTERPRISES LP increased its bottom line by earning $8.07 versus $2.14 in the prior year.
  • Net operating cash flow has significantly decreased to -$39.00 million or 108.12% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Currently the debt-to-equity ratio of 1.83 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated.

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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