5 Hold-Rated Dividend Stocks: PAAS, NEM, LMT, PGH, IVR

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."

Pan American Silver Corporation

Dividend Yield: 4.30%

Pan American Silver Corporation (NASDAQ: PAAS) shares currently have a dividend yield of 4.30%.

Pan American Silver Corp. engages in the exploration, development, and operation of silver producing properties and assets. It produces and sells silver, gold, copper, lead, and zinc. The company has a P/E ratio of 65.22.

The average volume for Pan American Silver Corporation has been 2,049,900 shares per day over the past 30 days. Pan American Silver Corporation has a market cap of $1.8 billion and is part of the metals & mining industry. Shares are down 37.3% year to date as of the close of trading on Monday.

TheStreet Ratings rates Pan American Silver Corporation as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 3.3%. Since the same quarter one year prior, revenues rose by 16.1%. 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.
  • PAAS's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.43, which clearly demonstrates the ability to cover short-term cash needs.
  • 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. When compared to other companies in the Metals & Mining industry and the overall market, PAN AMERICAN SILVER CORP's return on equity is below that of both the industry average and the S&P 500.
  • PAN AMERICAN SILVER CORP 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, PAN AMERICAN SILVER CORP reported lower earnings of $0.61 versus $3.01 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 Metals & Mining industry. The net income has significantly decreased by 130.5% when compared to the same quarter one year ago, falling from $95.36 million to -$29.06 million.

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Newmont Mining Corporation

Dividend Yield: 4.60%

Newmont Mining Corporation (NYSE: NEM) shares currently have a dividend yield of 4.60%.

Newmont Mining Corporation, together with its subsidiaries, engages in the acquisition, exploration, and production of gold and copper properties. The company's assets or operations are located in the United States, Australia, Peru, Indonesia, Ghana, Mexico, and New Zealand. The company has a P/E ratio of 9.28.

The average volume for Newmont Mining Corporation has been 8,832,900 shares per day over the past 30 days. Newmont Mining Corporation has a market cap of $15.1 billion and is part of the metals & mining industry. Shares are down 30.5% year to date as of the close of trading on Monday.

TheStreet Ratings rates Newmont Mining Corporation as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • 49.90% is the gross profit margin for NEWMONT MINING CORP which we consider to be strong. Regardless of NEM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NEM's net profit margin of 14.46% significantly outperformed against the industry.
  • The current debt-to-equity ratio, 0.46, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.84 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 27.77%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 43.24% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • Net operating cash flow has decreased to $433.00 million or 28.89% 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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Lockheed Martin Corporation

Dividend Yield: 4.30%

Lockheed Martin Corporation (NYSE: LMT) shares currently have a dividend yield of 4.30%.

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 12.29.

The average volume for Lockheed Martin Corporation has been 2,249,300 shares per day over the past 30 days. Lockheed Martin Corporation has a market cap of $34.1 billion and is part of the aerospace/defense industry. Shares are up 15.3% year to date as of the close of trading on Monday.

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 ($9.00 versus $8.34).
  • LMT, with its decline in revenue, slightly underperformed the industry average of 4.5%. 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.

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Pengrowth Energy

Dividend Yield: 9.20%

Pengrowth Energy (NYSE: PGH) shares currently have a dividend yield of 9.20%.

Pengrowth Energy Corporation engages in the acquisition, exploration, development, and production of oil and natural gas reserves in Canada.

The average volume for Pengrowth Energy has been 2,322,400 shares per day over the past 30 days. Pengrowth Energy has a market cap of $2.6 billion and is part of the energy industry. Shares are up 5.2% year to date as of the close of trading on Monday.

TheStreet Ratings rates Pengrowth Energy as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures 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:
  • The revenue growth came in higher than the industry average of 8.8%. Since the same quarter one year prior, revenues rose by 10.8%. 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 current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels.
  • The gross profit margin for PENGROWTH ENERGY CORP is rather high; currently it is at 52.80%. Regardless of PGH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PGH's net profit margin of -24.82% significantly underperformed when compared to the industry average.
  • 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 9135.0% when compared to the same quarter one year ago, falling from $0.72 million to -$65.05 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 Oil, Gas & Consumable Fuels industry and the overall market, PENGROWTH ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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Invesco Mortgage Capital

Dividend Yield: 12.70%

Invesco Mortgage Capital (NYSE: IVR) shares currently have a dividend yield of 12.70%.

Invesco Mortgage Capital Inc., a real estate investment trust (REIT), focuses on investing in, financing, and managing residential and commercial mortgage-backed securities and mortgage loans. It invests in residential mortgage-backed securities for which a U.S. The company has a P/E ratio of 7.26.

The average volume for Invesco Mortgage Capital has been 1,806,900 shares per day over the past 30 days. Invesco Mortgage Capital has a market cap of $2.8 billion and is part of the real estate industry. Shares are up 3.6% year to date as of the close of trading on Monday.

TheStreet Ratings rates Invesco Mortgage Capital as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and increase in net income. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share and disappointing return on equity.

Highlights from the ratings report include:
  • IVR's revenue growth has slightly outpaced the industry average of 12.0%. Since the same quarter one year prior, revenues rose by 13.4%. 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.
  • 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, INVESCO MORTGAGE CAPITAL INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • INVESCO MORTGAGE CAPITAL INC's earnings per share declined by 11.1% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, INVESCO MORTGAGE CAPITAL INC reported lower earnings of $2.89 versus $3.45 in the prior year. For the next year, the market is expecting a contraction of 13.5% in earnings ($2.50 versus $2.89).

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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