5 Hold-Rated Dividend Stocks: OFC, RSO, HTS, CM, IEP

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."

Corporate Office Properties

Dividend Yield: 4.20%

Corporate Office Properties (NYSE: OFC) shares currently have a dividend yield of 4.20%.

Owns, manages, leases, acquires and develops suburban office properties located in the Greater Washington DC and other markets. At Dec. 31, 2005, this self-managed real estate investment trust owned 165 operating office properties with 13.7 million rentable square feet and several land parcels.

The average volume for Corporate Office Properties has been 609,000 shares per day over the past 30 days. Corporate Office Properties has a market cap of $2.3 billion and is part of the real estate industry. Shares are up 5.8% year to date as of the close of trading on Monday.

TheStreet Ratings rates Corporate Office Properties as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, good cash flow from operations and increase in stock price during the past year. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 45.9% when compared to the same quarter one year prior, rising from $10.30 million to $15.02 million.
  • Net operating cash flow has slightly increased to $47.31 million or 8.04% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -16.35%.
  • 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 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, CORP OFFICE PPTYS TR INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for CORP OFFICE PPTYS TR INC is currently lower than what is desirable, coming in at 27.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 11.38% significantly trails the industry average.

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

Resource Capital Corporation

Dividend Yield: 12.60%

Resource Capital Corporation (NYSE: RSO) shares currently have a dividend yield of 12.60%.

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 9.89.

The average volume for Resource Capital Corporation has been 1,745,900 shares per day over the past 30 days. Resource Capital Corporation has a market cap of $803.8 million and is part of the real estate industry. Shares are up 12.9% year to date as of the close of trading on Monday.

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 good cash flow from operations. 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.

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 7.70.

The average volume for Hatteras Financial Corporation has been 774,700 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 3.2% year to date as of the close of trading on Monday.

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 9.17% 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.

Canadian Imperial Bank of Commerce

Dividend Yield: 5.00%

Canadian Imperial Bank of Commerce (NYSE: CM) shares currently have a dividend yield of 5.00%.

Canadian Imperial Bank of Commerce provides various financial products and services to individual, small business, commercial, corporate, and institutional customers in Canada and internationally. The company has a P/E ratio of 9.49.

The average volume for Canadian Imperial Bank of Commerce has been 206,600 shares per day over the past 30 days. Canadian Imperial Bank of Commerce has a market cap of $30.3 billion and is part of the banking industry. Shares are down 5.8% year to date as of the close of trading on Monday.

TheStreet Ratings rates Canadian Imperial Bank of Commerce as a hold. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive.

Highlights from the ratings report include:
  • CANADIAN IMPERIAL BANK has improved earnings per share by 11.6% 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, CANADIAN IMPERIAL BANK increased its bottom line by earning $7.85 versus $7.30 in the prior year.
  • Net operating cash flow has significantly increased by 108.27% to $235.00 million when compared to the same quarter last year. In addition, CANADIAN IMPERIAL BANK has also vastly surpassed the industry average cash flow growth rate of 13.20%.
  • 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'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, CANADIAN IMPERIAL BANK's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Commercial Banks industry average, but is greater than that of the S&P 500. The net income increased by 7.9% when compared to the same quarter one year prior, going from $810.00 million to $874.00 million.

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

Icahn

Dividend Yield: 5.50%

Icahn (NASDAQ: IEP) shares currently have a dividend yield of 5.50%.

Icahn Enterprises L.P. engages in the investment, automotive, gaming, railcar, food packaging, metals, real estate, and home fashion businesses in the United States and internationally. Its Investment segment provides investment advisory, and administrative and back office services. The company has a P/E ratio of 12.59.

The average volume for Icahn has been 234,400 shares per day over the past 30 days. Icahn has a market cap of $8.0 billion and is part of the automotive industry. Shares are up 62.6% year to date as of the close of trading on Monday.

TheStreet Ratings rates Icahn as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and disappointing return on equity.

Highlights from the ratings report include:
  • IEP's very impressive revenue growth greatly exceeded the industry average of 0.7%. Since the same quarter one year prior, revenues leaped by 89.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 273.79% and other important driving factors, this stock has surged by 33.62% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • ICAHN ENTERPRISES 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. During the past fiscal year, ICAHN ENTERPRISES LP increased its bottom line by earning $8.07 versus $2.14 in the prior year.
  • Net operating cash flow has significantly decreased to -$39.00 million or 108.12% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Currently the debt-to-equity ratio of 1.83 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated.

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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