3 Hold-Rated Dividend Stocks: CYS, CLI, SAN

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 3 stocks with substantial yields, that ultimately, we have rated "Hold."

CYS Investments

Dividend Yield: 11.10%

CYS Investments (NYSE: CYS) shares currently have a dividend yield of 11.10%.

No company description available. The company has a P/E ratio of 6.14.

The average volume for CYS Investments has been 2,631,200 shares per day over the past 30 days. CYS Investments has a market cap of $2.0 billion and is part of the real estate industry. Shares are down 2.7% year to date as of the close of trading on Thursday.

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:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.0%. 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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Mack-Cali Realty

Dividend Yield: 4.40%

Mack-Cali Realty (NYSE: CLI) shares currently have a dividend yield of 4.40%.

Mack-Cali Realty Corporation is a real estate investment trust (REIT). It engages in the leasing, management, acquisition, development, and construction of commercial real estate properties in the United States. The company has a P/E ratio of 77.91.

The average volume for Mack-Cali Realty has been 848,600 shares per day over the past 30 days. Mack-Cali Realty has a market cap of $2.4 billion and is part of the real estate industry. Shares are up 4.4% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Mack-Cali Realty as a hold. Among the primary strengths of the company is its revenue growth. 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:
  • CLI's revenue growth trails the industry average of 12.0%. Since the same quarter one year prior, revenues slightly increased by 0.9%. 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.
  • MACK-CALI REALTY 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. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MACK-CALI REALTY CORP reported lower earnings of $0.44 versus $0.77 in the prior year. This year, the market expects an improvement in earnings ($0.54 versus $0.44).
  • Net operating cash flow has decreased to $49.07 million or 13.77% when compared to the same quarter last year. Despite a decrease in cash flow of 13.77%, MACK-CALI REALTY CORP is in line with the industry average cash flow growth rate of -20.78%.
  • 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, MACK-CALI REALTY CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for MACK-CALI REALTY CORP is rather low; currently it is at 22.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.41% significantly trails the industry average.

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Banco Santander

Dividend Yield: 8.60%

Banco Santander (NYSE: SAN) shares currently have a dividend yield of 8.60%.

Banco Santander-Chile provides commercial and retail banking services to corporate and individual customers in Chile.

The average volume for Banco Santander has been 6,518,000 shares per day over the past 30 days. Banco Santander has a market cap of $74.3 billion and is part of the banking industry. Shares are down 13.7% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Banco Santander as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, premium valuation and deteriorating net income.

Highlights from the ratings report include:
  • SAN's revenue growth has slightly outpaced the industry average of 1.1%. Since the same quarter one year prior, revenues slightly increased by 4.9%. 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.
  • 46.60% is the gross profit margin for BANCO SANTANDER-CHILE which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, SAN's net profit margin of 16.80% compares favorably to the industry average.
  • 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. In comparison to the other companies in the Commercial Banks industry and the overall market, BANCO SANTANDER-CHILE's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • The share price of BANCO SANTANDER-CHILE has not done very well: it is down 6.64% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.

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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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