5 Hold-Rated Dividend Stocks: CWH, NS, HTS, VNR, AGNC

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."

CommonWealth REIT

Dividend Yield: 4.90%

CommonWealth REIT (NYSE: CWH) shares currently have a dividend yield of 4.90%.

CommonWealth REIT is a real estate investment trust launched and managed by Reit Management & Research LLC. The fund invests in the real estate markets of the United States. It seeks to invest in office buildings, industrial buildings, and leased industrial land. The company has a P/E ratio of 51.08.

The average volume for CommonWealth REIT has been 2,870,000 shares per day over the past 30 days. CommonWealth REIT has a market cap of $2.4 billion and is part of the real estate industry. Shares are up 29% year to date as of the close of trading on Friday.

TheStreet Ratings rates CommonWealth REIT as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and increase in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • CWH'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 appears to have trickled down to the company's bottom line, improving the earnings per share.
  • COMMONWEALTH REIT has improved earnings per share by 33.3% 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. During the past fiscal year, COMMONWEALTH REIT increased its bottom line by earning $0.34 versus $0.19 in the prior year.
  • 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.
  • 36.70% is the gross profit margin for COMMONWEALTH REIT which we consider to be strong. Regardless of CWH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CWH's net profit margin of 9.17% is significantly lower than 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 Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, COMMONWEALTH REIT underperformed against that of the industry average and is significantly less than 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.

NuStar Energy L.P

Dividend Yield: 9.30%

NuStar Energy L.P (NYSE: NS) shares currently have a dividend yield of 9.30%.

NuStar Energy L.P. engages in the terminalling, storage, and transportation of petroleum products primarily in the United States and the Netherlands. The company operates in three segments: Storage, Transportation, and Asphalt and Fuels Marketing.

The average volume for NuStar Energy L.P has been 355,400 shares per day over the past 30 days. NuStar Energy L.P has a market cap of $3.7 billion and is part of the energy industry. Shares are up 9.7% year to date as of the close of trading on Friday.

TheStreet Ratings rates NuStar Energy L.P as a hold. Among the primary strengths of the company is its generally strong cash flow from operations. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 1602.13% to $144.40 million when compared to the same quarter last year. In addition, NUSTAR ENERGY LP has also vastly surpassed the industry average cash flow growth rate of -25.50%.
  • NS, with its decline in revenue, underperformed when compared the industry average of 10.6%. Since the same quarter one year prior, revenues fell by 37.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • NUSTAR ENERGY LP 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, NUSTAR ENERGY LP swung to a loss, reporting -$2.79 versus $2.79 in the prior year. This year, the market expects an improvement in earnings ($1.74 versus -$2.79).
  • 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, NUSTAR ENERGY LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • 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 the Oil, Gas & Consumable Fuels industry average. The net income has decreased by 6.8% when compared to the same quarter one year ago, dropping from $26.35 million to $24.57 million.

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

Hatteras Financial Corporation

Dividend Yield: 10.70%

Hatteras Financial Corporation (NYSE: HTS) shares currently have a dividend yield of 10.70%.

Hatteras Financial Corp. operates as an externally-managed mortgage real estate investment trust (REIT) in the United States. The company has a P/E ratio of 7.67.

The average volume for Hatteras Financial Corporation has been 755,800 shares per day over the past 30 days. Hatteras Financial Corporation has a market cap of $2.6 billion and is part of the real estate industry. Shares are up 5.1% year to date as of the close of trading on Friday.

TheStreet Ratings rates Hatteras Financial Corporation 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 feeble growth in the company's earnings per share, unimpressive growth in 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 10.0%. 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 HATTERAS FINANCIAL CORP is currently very high, coming in at 94.70%. Regardless of HTS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HTS's net profit margin of 52.86% significantly outperformed against the industry.
  • The share price of HATTERAS FINANCIAL CORP has not done very well: it is down 8.24% 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. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • HATTERAS FINANCIAL CORP's earnings per share declined by 30.3% 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, HATTERAS FINANCIAL CORP reported lower earnings of $3.65 versus $3.96 in the prior year. For the next year, the market is expecting a contraction of 28.1% in earnings ($2.63 versus $3.65).

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

Vanguard Natural Resources

Dividend Yield: 8.70%

Vanguard Natural Resources (NASDAQ: VNR) shares currently have a dividend yield of 8.70%.

Vanguard Natural Resources, LLC, through its subsidiaries, engages in the acquisition and development of oil and natural gas properties in the United States.

The average volume for Vanguard Natural Resources has been 534,700 shares per day over the past 30 days. Vanguard Natural Resources has a market cap of $1.9 billion and is part of the energy industry. Shares are up 8.4% year to date as of the close of trading on Friday.

TheStreet Ratings rates Vanguard Natural Resources as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 10.6%. Since the same quarter one year prior, revenues rose by 18.8%. 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.
  • Net operating cash flow has increased to $58.24 million or 26.40% when compared to the same quarter last year. In addition, VANGUARD NATURAL RESOURCES has also vastly surpassed the industry average cash flow growth rate of -25.50%.
  • 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 debt-to-equity ratio of 1.02 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, VNR has a quick ratio of 0.67, this demonstrates the lack of ability of the company to cover short-term liquidity 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, VANGUARD NATURAL RESOURCES'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.

American Capital Agency

Dividend Yield: 18.80%

American Capital Agency (NASDAQ: AGNC) shares currently have a dividend yield of 18.80%.

American Capital Agency Corp. operates as a real estate investment trust (REIT). The company has a P/E ratio of 12.40.

The average volume for American Capital Agency has been 7,929,300 shares per day over the past 30 days. American Capital Agency has a market cap of $10.6 billion and is part of the real estate industry. Shares are down 7.8% year to date as of the close of trading on Friday.

TheStreet Ratings rates American Capital Agency as a hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations 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:
  • Net operating cash flow has slightly increased to $518.00 million or 9.74% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -16.08%.
  • The gross profit margin for AMERICAN CAPITAL AGENCY CORP is currently very high, coming in at 91.90%. Regardless of AGNC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AGNC's net profit margin of 44.33% significantly outperformed against the industry.
  • 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 64.0% when compared to the same quarter one year ago, falling from $641.00 million to $231.00 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 Real Estate Investment Trusts (REITs) industry and the overall market, AMERICAN CAPITAL AGENCY CORP's return on equity is below 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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