5 Hold-Rated Dividend Stocks: RIG, BP, TWO, EVEP, BBEP

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."

Transocean

Dividend Yield: 4.30%

Transocean (NYSE: RIG) shares currently have a dividend yield of 4.30%.

Transocean Ltd. provides offshore contract drilling services for oil and gas wells worldwide. It offers deepwater and harsh environment drilling, oil and gas drilling management, and drilling engineering and drilling project management services, as well as logistics services. The company has a P/E ratio of 19.16.

The average volume for Transocean has been 3,130,300 shares per day over the past 30 days. Transocean has a market cap of $18.8 billion and is part of the energy industry. Shares are up 17.1% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Transocean as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:
  • TRANSOCEAN LTD 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, TRANSOCEAN LTD turned its bottom line around by earning $2.62 versus -$17.75 in the prior year. This year, the market expects an improvement in earnings ($4.48 versus $2.62).
  • 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 3110.0% when compared to the same quarter one year prior, rising from $10.00 million to $321.00 million.
  • RIG's debt-to-equity ratio of 0.70 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that RIG's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.73 is high and demonstrates strong liquidity.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, TRANSOCEAN LTD's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has significantly decreased to $106.00 million or 80.37% 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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BP

Dividend Yield: 5.00%

BP (NYSE: BP) shares currently have a dividend yield of 5.00%.

BP p.l.c. provides fuel for transportation, energy for heat and light, lubricants to engines, and petrochemicals products. The company has a P/E ratio of 436.00.

The average volume for BP has been 5,997,600 shares per day over the past 30 days. BP has a market cap of $138.5 billion and is part of the energy industry. Shares are up 4.7% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates BP as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 192.4% when compared to the same quarter one year prior, rising from $5,767.00 million to $16,863.00 million.
  • The current debt-to-equity ratio, 0.36, 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 0.90 is somewhat weak and could be cause for future problems.
  • The gross profit margin for BP PLC is currently extremely low, coming in at 14.50%. Regardless of BP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, BP's net profit margin of 17.91% 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, BP PLC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Two Harbors Investment

Dividend Yield: 11.50%

Two Harbors Investment (NYSE: TWO) shares currently have a dividend yield of 11.50%.

Two Harbors Investment Corp. operates as a real estate investment trust (REIT) that focuses on investing in, financing, and managing residential mortgage-backed securities (RMBS), residential mortgage loans, and other financial assets. The company has a P/E ratio of 8.15.

The average volume for Two Harbors Investment has been 7,708,300 shares per day over the past 30 days. Two Harbors Investment has a market cap of $4.1 billion and is part of the real estate industry. Shares are up 1.4% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Two Harbors Investment as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:
  • TWO's very impressive revenue growth greatly exceeded the industry average of 12.1%. Since the same quarter one year prior, revenues leaped by 101.3%. Growth in the company's revenue appears to have helped boost the 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, TWO HARBORS INVESTMENT CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • TWO HARBORS 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TWO HARBORS INVESTMENT CORP reported lower earnings of $1.11 versus $1.27 in the prior year. This year, the market expects an improvement in earnings ($1.25 versus $1.11).
  • Net operating cash flow has significantly decreased to -$20.48 million or 156.49% 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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EV Energy Partner

Dividend Yield: 7.50%

EV Energy Partner (NASDAQ: EVEP) shares currently have a dividend yield of 7.50%.

EV Energy Partners, L.P. engages in the acquisition, development, and production of oil and natural gas properties in the United States.

The average volume for EV Energy Partner has been 437,600 shares per day over the past 30 days. EV Energy Partner has a market cap of $1.7 billion and is part of the energy industry. Shares are down 28.1% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates EV Energy Partner 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 deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.7%. Since the same quarter one year prior, revenues slightly dropped by 5.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • EVEP's debt-to-equity ratio of 0.96 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.14 is sturdy.
  • 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 262.9% when compared to the same quarter one year ago, falling from $28.59 million to -$46.58 million.
  • 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, EV ENERGY PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.

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BreitBurn Energy Partners

Dividend Yield: 9.90%

BreitBurn Energy Partners (NASDAQ: BBEP) shares currently have a dividend yield of 9.90%.

BreitBurn Energy Partners L.P. engages in the acquisition, exploitation, and development of oil and gas properties in the United States.

The average volume for BreitBurn Energy Partners has been 603,300 shares per day over the past 30 days. BreitBurn Energy Partners has a market cap of $1.9 billion and is part of the energy industry. Shares are up 4.1% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates BreitBurn Energy Partners 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, weak operating cash flow and generally higher debt management risk.

Highlights from the ratings report include:
  • BBEP's very impressive revenue growth greatly exceeded the industry average of 9.7%. Since the same quarter one year prior, revenues leaped by 63.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 27.4% when compared to the same quarter one year prior, rising from -$49.97 million to -$36.30 million.
  • 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 $58.85 million or 17.45% when compared to the same quarter last year. Despite a decrease in cash flow of 17.45%, BREITBURN ENERGY PARTNERS LP is in line with the industry average cash flow growth rate of -23.08%.
  • 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, BREITBURN ENERGY PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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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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