5 Hold-Rated Dividend Stocks: KFN, CPLP, HGT, EBR.B, CHRM

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."

KKR Financial Holdings

Dividend Yield: 7.80%

KKR Financial Holdings (NYSE: KFN) shares currently have a dividend yield of 7.80%.

KKR Financial Holdings LLC, together with its subsidiaries, operates as a specialty finance company with expertise in a range of asset classes. The company has a P/E ratio of 5.81.

The average volume for KKR Financial Holdings has been 916,900 shares per day over the past 30 days. KKR Financial Holdings has a market cap of $2.2 billion and is part of the real estate industry. Shares are up 1.5% year to date as of the close of trading on Thursday.

TheStreet Ratings rates KKR Financial Holdings as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 4.3%. Since the same quarter one year prior, revenues rose by 17.2%. 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.
  • Compared to its closing price of one year ago, KFN's share price has jumped by 27.03%, exceeding the performance of the broader market during that same time frame. 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.
  • 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 Diversified Financial Services industry average. The net income increased by 11.7% when compared to the same quarter one year prior, going from $88.05 million to $98.34 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 Diversified Financial Services industry and the overall market, KKR FINANCIAL HOLDINGS LLC's return on equity exceeds that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is very high at 2.43 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.

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.

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 210,200 shares per day over the past 30 days. Capital Product Partners L.P has a market cap of $627.8 million and is part of the transportation industry. Shares are up 37.5% year to date as of the close of trading on Thursday.

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 8.8%. 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 of 10.01%, CAPITAL PRODUCT PARTNERS LP is in line with the industry average cash flow growth rate of -13.50%.
  • 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.

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.

Hugoton Royalty

Dividend Yield: 8.30%

Hugoton Royalty (NYSE: HGT) shares currently have a dividend yield of 8.30%.

Hugoton Royalty Trust operates as an express trust in the United States. The company holds an 80% net profits interests in certain natural gas producing working interest properties of XTO Energy Inc. XTO Energy Inc. The company has a P/E ratio of 17.32.

The average volume for Hugoton Royalty has been 166,700 shares per day over the past 30 days. Hugoton Royalty has a market cap of $367.2 million and is part of the energy industry. Shares are up 24.1% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Hugoton Royalty 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 and expanding profit margins. 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:
  • HGT 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.
  • The gross profit margin for HUGOTON ROYALTY TRUST is currently very high, coming in at 100.00%. HGT has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, HGT's net profit margin of 61.73% significantly outperformed against the industry.
  • The revenue fell significantly faster than the industry average of 8.8%. Since the same quarter one year prior, revenues fell by 41.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • HUGOTON ROYALTY TRUST 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 two years. During the past fiscal year, HUGOTON ROYALTY TRUST reported lower earnings of $0.58 versus $1.40 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 63.8% when compared to the same quarter one year ago, falling from $13.09 million to $4.74 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.

Centrais Eletricas Brasileiras

Dividend Yield: 17.00%

Centrais Eletricas Brasileiras (NYSE: EBR.B) shares currently have a dividend yield of 17.00%.

Centrais Eletricas Brasileiras S.A. Eletrobras, together with its subsidiaries, engages in the generation, transmission, and distribution of electricity in Brazil. The company has a P/E ratio of 1.56.

The average volume for Centrais Eletricas Brasileiras has been 329,000 shares per day over the past 30 days. Centrais Eletricas Brasileiras has a market cap of $5.5 billion and is part of the utilities industry. Shares are down 10.4% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Centrais Eletricas Brasileiras as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, a generally disappointing performance in the stock itself and poor profit margins.

Highlights from the ratings report include:
  • EBR.B's very impressive revenue growth greatly exceeded the industry average of 13.3%. Since the same quarter one year prior, revenues leaped by 65.7%. 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 debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.76 is somewhat weak and could be cause for future problems.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 63.38%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 31.37% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • 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 Electric Utilities industry. The net income has significantly decreased by 29.5% when compared to the same quarter one year ago, falling from $684.73 million to $482.78 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.

Charm Communications

Dividend Yield: 10.20%

Charm Communications (NASDAQ: CHRM) shares currently have a dividend yield of 10.20%.

Charm Communications Inc. operates as an integrated advertising agency in the People's Republic of China. It operates in three segments: Media Investment Management, Advertising Agency, and Branding and Identity Services.

The average volume for Charm Communications has been 6,100 shares per day over the past 30 days. Charm Communications has a market cap of $187.3 million and is part of the media industry. Shares are up 21% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Charm Communications as a hold. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • CHRM 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. To add to this, CHRM has a quick ratio of 1.66, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The revenue fell significantly faster than the industry average of 1.1%. Since the same quarter one year prior, revenues fell by 41.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • CHARM COMMUNICATIONS 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. 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, CHARM COMMUNICATIONS INC swung to a loss, reporting -$0.12 versus $1.12 in the prior year. This year, the market expects an improvement in earnings ($0.28 versus -$0.12).
  • 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 Media industry and the overall market on the basis of return on equity, CHARM COMMUNICATIONS INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for CHARM COMMUNICATIONS INC is currently lower than what is desirable, coming in at 27.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -10.73% 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.

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