5 Hold-Rated Dividend Stocks: HR, MT, HCN, TWO, BMO

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."

Healthcare Realty

Dividend Yield: 4.90%

Healthcare Realty (NYSE: HR) shares currently have a dividend yield of 4.90%.

Healthcare Realty Trust Incorporated is an independent real estate investment trust. The firm invests in real estate markets of the United States. The company has a P/E ratio of 247.20.

The average volume for Healthcare Realty has been 681,900 shares per day over the past 30 days. Healthcare Realty has a market cap of $2.2 billion and is part of the real estate industry. Shares are down 0.9% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Healthcare Realty as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and poor profit margins.

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 slightly increased by 8.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • HEALTHCARE REALTY TRUST INC reported flat earnings per share in the most recent quarter. 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, HEALTHCARE REALTY TRUST INC turned its bottom line around by earning $0.10 versus -$0.04 in the prior year. This year, the market expects an improvement in earnings ($0.23 versus $0.10).
  • Net operating cash flow has significantly decreased to $3.13 million or 71.35% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 131.9% when compared to the same quarter one year ago, falling from $3.13 million to -$1.00 million.

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

ArcelorMittal

Dividend Yield: 5.70%

ArcelorMittal (NYSE: MT) shares currently have a dividend yield of 5.70%.

ArcelorMittal, together with its subsidiaries, operates as an integrated steel and mining company worldwide. The company operates through six segments: Flat Carbon Americas; Flat Carbon Europe; Long Carbon Americas and Europe; Asia, Africa, and CIS; Distribution Solutions; and Mining.

The average volume for ArcelorMittal has been 6,815,000 shares per day over the past 30 days. ArcelorMittal has a market cap of $18.6 billion and is part of the metals & mining industry. Shares are down 33.7% year to date as of the close of trading on Thursday.

TheStreet Ratings rates ArcelorMittal as a hold. The company's strongest point has been its a solid financial position based on a variety of debt and liquidity measures that we have looked at. 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:
  • MT, with its decline in revenue, underperformed when compared the industry average of 1.3%. Since the same quarter one year prior, revenues fell by 13.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • ARCELORMITTAL SA 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, ARCELORMITTAL SA swung to a loss, reporting -$2.42 versus $0.86 in the prior year. This year, the market expects an improvement in earnings ($0.40 versus -$2.42).
  • The share price of ARCELORMITTAL SA has not done very well: it is down 10.50% 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • Net operating cash flow has significantly decreased to -$302.00 million or 159.80% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 Metals & Mining industry. The net income has significantly decreased by 475.0% when compared to the same quarter one year ago, falling from $92.00 million to -$345.00 million.

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

Health Care REIT

Dividend Yield: 4.70%

Health Care REIT (NYSE: HCN) shares currently have a dividend yield of 4.70%.

Health Care REIT, Inc. is an independent equity real estate investment trust. The firm engages in acquiring, planning, developing, managing, repositioning and monetizing of real estate assets. It primarily invests in the real estate markets of the United States. The company has a P/E ratio of 89.59.

The average volume for Health Care REIT has been 2,303,700 shares per day over the past 30 days. Health Care REIT has a market cap of $18.6 billion and is part of the real estate industry. Shares are up 1.3% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Health Care REIT as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and compelling growth in net income. 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:
  • HCN's very impressive revenue growth greatly exceeded the industry average of 12.0%. Since the same quarter one year prior, revenues leaped by 51.6%. 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 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 22.5% when compared to the same quarter one year prior, going from $58.51 million to $71.66 million.
  • HEALTH CARE REIT 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. 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, HEALTH CARE REIT INC increased its bottom line by earning $0.45 versus $0.34 in the prior year. This year, the market expects an improvement in earnings ($0.85 versus $0.45).
  • 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, HEALTH CARE REIT INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for HEALTH CARE REIT INC is rather low; currently it is at 16.10%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 11.26% 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.

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 7.86.

The average volume for Two Harbors Investment has been 7,028,700 shares per day over the past 30 days. Two Harbors Investment has a market cap of $3.9 billion and is part of the real estate industry. Shares are down 4.4% year to date as of the close of trading on Thursday.

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 12.0%. 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.
  • In its most recent trading session, TWO has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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 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.

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

Bank of Montreal

Dividend Yield: 4.90%

Bank of Montreal (NYSE: BMO) shares currently have a dividend yield of 4.90%.

Bank of Montreal, together with its subsidiaries, provides various retail banking, wealth management, and investment banking products and services in North America and internationally. The company has a P/E ratio of 9.89.

The average volume for Bank of Montreal has been 517,400 shares per day over the past 30 days. Bank of Montreal has a market cap of $37.9 billion and is part of the banking industry. Shares are down 7.3% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Bank of Montreal as a hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, increase in stock price during the past year 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:
  • Net operating cash flow has significantly increased by 178.46% to $2,598.00 million when compared to the same quarter last year. In addition, BANK OF MONTREAL has also vastly surpassed the industry average cash flow growth rate of 13.20%.
  • 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.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.1%. Since the same quarter one year prior, revenues slightly dropped by 1.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 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 Commercial Banks industry and the overall market, BANK OF MONTREAL's return on equity exceeds 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 greatly underperformed compared to the Commercial Banks industry average. The net income has decreased by 5.2% when compared to the same quarter one year ago, dropping from $1,010.00 million to $957.00 million.

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

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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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