5 Hold-Rated Dividend Stocks: MFA, RPAI, LMT, NCT, VCI

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."

MFA Financial

Dividend Yield: 9.30%

MFA Financial (NYSE: MFA) shares currently have a dividend yield of 9.30%.

MFA Financial, Inc., a real estate investment trust (REIT), invests in residential agency and non-agency mortgage-backed securities (MBS). The company has a P/E ratio of 11.67.

The average volume for MFA Financial has been 3,478,400 shares per day over the past 30 days. MFA Financial has a market cap of $3.4 billion and is part of the real estate industry. Shares are up 15.3% year to date as of the close of trading on Thursday.

TheStreet Ratings rates MFA Financial as a hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins and solid stock price performance. 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:
  • The gross profit margin for MFA FINANCIAL INC is currently very high, coming in at 93.20%. Regardless of MFA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MFA's net profit margin of 62.19% significantly outperformed against the industry.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite 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 change in net income from the same quarter one year ago has exceeded that of the Real Estate Investment Trusts (REITs) industry average, but is less than that of the S&P 500. The net income has decreased by 8.7% when compared to the same quarter one year ago, dropping from $84.71 million to $77.35 million.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, MFA FINANCIAL INC has outperformed in comparison with the industry average, but has underperformed when compared to that of 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.

Retail Properties of American

Dividend Yield: 4.10%

Retail Properties of American (NYSE: RPAI) shares currently have a dividend yield of 4.10%.

Inland Western Retail Real Estate Trust, Inc. is a real estate investment trust. It engages in acquisition, development and management of properties. The trust invests in the real estate markets of United States. The company has a P/E ratio of 533.00.

The average volume for Retail Properties of American has been 796,000 shares per day over the past 30 days. Retail Properties of American has a market cap of $2.9 billion and is part of the real estate industry. Shares are up 33.6% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Retail Properties of American as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and notable return on equity. 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:
  • Powered by its strong earnings growth of 66.66% and other important driving factors, this stock has surged by 76.25% over the past year, outperforming the rise in the S&P 500 Index during the same period.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 88.5% when compared to the same quarter one year prior, rising from -$16.29 million to -$1.88 million.
  • Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, RETAIL PPTYS OF AMERICA INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • RETAIL PPTYS OF AMERICA INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. For the next year, the market is expecting a contraction of 300.0% in earnings (-$0.12 versus -$0.03).
  • The gross profit margin for RETAIL PPTYS OF AMERICA INC is rather low; currently it is at 24.90%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.34% is significantly below 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.

Lockheed Martin Corporation

Dividend Yield: 4.50%

Lockheed Martin Corporation (NYSE: LMT) shares currently have a dividend yield of 4.50%.

Lockheed Martin Corporation, a security and aerospace company, engages in the research, design, development, manufacture, integration, and sustainment of advanced technology systems and products for defense, civil, and commercial applications in the United States and internationally. The company has a P/E ratio of 11.76.

The average volume for Lockheed Martin Corporation has been 2,293,900 shares per day over the past 30 days. Lockheed Martin Corporation has a market cap of $32.6 billion and is part of the aerospace/defense industry. Shares are up 9.8% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Lockheed Martin Corporation as a hold. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, growth in earnings per share and notable return on equity. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.
  • LOCKHEED MARTIN CORP has improved earnings per share by 15.3% 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, LOCKHEED MARTIN CORP increased its bottom line by earning $8.34 versus $7.86 in the prior year. This year, the market expects an improvement in earnings ($8.95 versus $8.34).
  • LMT, with its decline in revenue, slightly underperformed the industry average of 3.3%. Since the same quarter one year prior, revenues slightly dropped by 2.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for LOCKHEED MARTIN CORP is currently extremely low, coming in at 11.80%. Regardless of LMT'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 6.87% trails the industry average.
  • The debt-to-equity ratio is very high at 20.74 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, LMT maintains a poor quick ratio of 0.79, which illustrates the inability to avoid short-term cash problems.

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.

Newcastle Investment Corporation

Dividend Yield: 7.10%

Newcastle Investment Corporation (NYSE: NCT) shares currently have a dividend yield of 7.10%.

Newcastle Investment Corp. operates as a real estate investment and finance company in the United States. The company has a P/E ratio of 5.14.

The average volume for Newcastle Investment Corporation has been 5,262,300 shares per day over the past 30 days. Newcastle Investment Corporation has a market cap of $3.1 billion and is part of the real estate industry. Shares are up 41.7% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Newcastle Investment Corporation as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and compelling growth in net income. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good.

Highlights from the ratings report include:
  • NCT's revenue growth has slightly outpaced the industry average of 10.1%. Since the same quarter one year prior, revenues rose by 19.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 77.77% and other important driving factors, this stock has surged by 65.17% 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.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, NEWCASTLE INVESTMENT CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • NEWCASTLE INVESTMENT CORP 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, NEWCASTLE INVESTMENT CORP reported lower earnings of $2.84 versus $3.49 in the prior year. For the next year, the market is expecting a contraction of 60.4% in earnings ($1.13 versus $2.84).

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.

Valassis Communications

Dividend Yield: 4.90%

Valassis Communications (NYSE: VCI) shares currently have a dividend yield of 4.90%.

Valassis Communications, Inc., together with its subsidiaries, provides media solutions primarily in the United States and Europe. The company has a P/E ratio of 9.04.

The average volume for Valassis Communications has been 499,100 shares per day over the past 30 days. Valassis Communications has a market cap of $984.5 million and is part of the media industry. Shares are down 1.7% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Valassis Communications as a hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, solid stock price performance 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 and poor profit margins.

Highlights from the ratings report include:
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite 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 underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Media industry average. The net income has decreased by 18.0% when compared to the same quarter one year ago, dropping from $26.42 million to $21.67 million.
  • The gross profit margin for VALASSIS COMMUNICATIONS INC is currently lower than what is desirable, coming in at 27.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.49% 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.

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.
null