5 Hold-Rated Dividend Stocks: RSO, VLY, CMO, UAN, GSJK

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."

Resource Capital Corporation

Dividend Yield: 12.40%

Resource Capital Corporation (NYSE: RSO) shares currently have a dividend yield of 12.40%.

Resource Capital Corp., a specialty finance company, purchases and manages a diversified portfolio of commercial real estate-related assets and commercial finance assets in the United States. The company has a P/E ratio of 10.08.

The average volume for Resource Capital Corporation has been 1,708,400 shares per day over the past 30 days. Resource Capital Corporation has a market cap of $819.0 million and is part of the real estate industry. Shares are up 15.2% year to date as of the close of trading on Thursday.

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

Highlights from the ratings report include:
  • RSO's revenue growth has slightly outpaced the industry average of 12.0%. Since the same quarter one year prior, revenues rose by 12.5%. 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.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength 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, RESOURCE CAPITAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • RESOURCE CAPITAL CORP's earnings per share declined by 38.9% 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, RESOURCE CAPITAL CORP increased its bottom line by earning $0.72 versus $0.56 in the prior year. For the next year, the market is expecting a contraction of 11.1% in earnings ($0.64 versus $0.72).
  • 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 11.4% when compared to the same quarter one year ago, dropping from $14.48 million to $12.84 million.

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Valley National Bancorp

Dividend Yield: 7.10%

Valley National Bancorp (NYSE: VLY) shares currently have a dividend yield of 7.10%.

Valley National Bancorp operates as the bank holding company for the Valley National Bank that provides commercial, retail, and wealth management financial services. The company has a P/E ratio of 12.92.

The average volume for Valley National Bancorp has been 1,090,400 shares per day over the past 30 days. Valley National Bancorp has a market cap of $1.8 billion and is part of the banking industry. Shares are down 1.1% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Valley National Bancorp as a hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins, notable return on equity and reasonable valuation levels. 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 unimpressive growth in net income.

Highlights from the ratings report include:
  • The gross profit margin for VALLEY NATIONAL BANCORP is currently very high, coming in at 75.70%. 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 16.98% trails the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, VALLEY NATIONAL BANCORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • VALLEY NATIONAL BANCORP's earnings per share declined by 11.6% in the most recent quarter compared to 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, VALLEY NATIONAL BANCORP reported lower earnings of $0.74 versus $0.76 in the prior year. For the next year, the market is expecting a contraction of 17.7% in earnings ($0.61 versus $0.74).
  • 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 Commercial Banks industry average. The net income has decreased by 9.3% when compared to the same quarter one year ago, dropping from $34.53 million to $31.31 million.

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Capstead Mortgage Corporation

Dividend Yield: 10.10%

Capstead Mortgage Corporation (NYSE: CMO) shares currently have a dividend yield of 10.10%.

Capstead Mortgage Corporation operates as a real estate investment trust in the United States. The company has a P/E ratio of 8.94.

The average volume for Capstead Mortgage Corporation has been 736,000 shares per day over the past 30 days. Capstead Mortgage Corporation has a market cap of $1.2 billion and is part of the real estate industry. Shares are up 6.8% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Capstead Mortgage Corporation as a hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins 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 gross profit margin for CAPSTEAD MORTGAGE CORP is currently very high, coming in at 94.80%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 59.57% significantly outperformed against the industry average.
  • CMO, with its decline in revenue, underperformed when compared the industry average of 12.0%. Since the same quarter one year prior, revenues fell by 10.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • CAPSTEAD MORTGAGE CORP's earnings per share declined by 29.5% 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, CAPSTEAD MORTGAGE CORP reported lower earnings of $1.50 versus $1.75 in the prior year. For the next year, the market is expecting a contraction of 13.0% in earnings ($1.31 versus $1.50).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Real Estate Investment Trusts (REITs) industry. The net income has decreased by 22.7% when compared to the same quarter one year ago, dropping from $45.17 million to $34.92 million.

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CVR Partners

Dividend Yield: 10.20%

CVR Partners (NYSE: UAN) shares currently have a dividend yield of 10.20%.

CVR Partners, LP engages in the production, distribution, and marketing of nitrogen fertilizers in North America. Its nitrogen fertilizer products include ammonia and urea ammonium nitrate. CVR GP, LLC serves as the general partner of the company. The company has a P/E ratio of 14.91.

The average volume for CVR Partners has been 319,300 shares per day over the past 30 days. CVR Partners has a market cap of $1.8 billion and is part of the chemicals industry. Shares are down 4.2% year to date as of the close of trading on Thursday.

TheStreet Ratings rates CVR Partners 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 expanding profit margins. However, as a counter to these strengths, we find that net income has been generally deteriorating over time.

Highlights from the ratings report include:
  • UAN's revenue growth has slightly outpaced the industry average of 0.6%. Since the same quarter one year prior, revenues slightly increased by 4.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • UAN's debt-to-equity ratio is very low at 0.27 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 2.58, which clearly demonstrates the ability to cover short-term cash needs.
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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 net income growth from the same quarter one year ago, has significantly underperformed compared to the Chemicals industry average, but is greater than that of the S&P 500. The net income increased by 17.6% when compared to the same quarter one year prior, going from $30.24 million to $35.55 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Chemicals industry and the overall market, CVR PARTNERS LP's return on equity exceeds that of the industry average and significantly exceeds 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.

Compressco Partners

Dividend Yield: 8.40%

Compressco Partners (NASDAQ: GSJK) shares currently have a dividend yield of 8.40%.

Compressco Partners, L.P. provides compression-based production enhancement services for natural gas and oil exploration and production companies. Its production enhancement services are used in both conventional wellhead compression applications and unconventional compression applications. The company has a P/E ratio of 17.74.

The average volume for Compressco Partners has been 15,200 shares per day over the past 30 days. Compressco Partners has a market cap of $186.5 million and is part of the energy industry. Shares are up 21% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Compressco Partners as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and impressive record of earnings per share growth. 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:
  • The revenue growth came in higher than the industry average of 7.4%. Since the same quarter one year prior, revenues rose by 36.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 61.11% and other important driving factors, this stock has surged by 50.30% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although GSJK had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • COMPRESSCO PARTNERS 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, COMPRESSCO PARTNERS LP increased its bottom line by earning $1.04 versus $0.47 in the prior year. This year, the market expects an improvement in earnings ($1.10 versus $1.04).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 64.0% when compared to the same quarter one year prior, rising from $2.77 million to $4.54 million.
  • 43.50% is the gross profit margin for COMPRESSCO PARTNERS LP which we consider to be strong. Regardless of GSJK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GSJK's net profit margin of 14.75% compares favorably to 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.

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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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