5 Hold-Rated Dividend Stocks: RGP, ARR, IAG, TCK, EXC

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."

Regency Energy Partners

Dividend Yield: 7.40%

Regency Energy Partners (NYSE: RGP) shares currently have a dividend yield of 7.40%.

Regency Energy Partners LP engages in gathering, treating, processing, compressing, and transporting natural gas and natural gas liquids (NGLs). The company operates in Gathering and Processing, Natural Gas Transportation, NGL Services, and Contract Services segments.

The average volume for Regency Energy Partners has been 662,100 shares per day over the past 30 days. Regency Energy Partners has a market cap of $5.0 billion and is part of the energy industry. Shares are up 16.2% year to date as of the close of trading on Monday.

TheStreet Ratings rates Regency Energy Partners as a hold. The company's strengths can be seen in multiple areas, such as its 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, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • Net operating cash flow has increased to $67.00 million or 19.49% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -25.51%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.7%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for REGENCY ENERGY PARTNERS LP is rather low; currently it is at 21.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.43% is significantly below that of the industry average.
  • 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 117.5% when compared to the same quarter one year ago, falling from $28.50 million to -$5.00 million.

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

ARMOUR Residential REIT

Dividend Yield: 18.50%

ARMOUR Residential REIT (NYSE: ARR) shares currently have a dividend yield of 18.50%.

ARMOUR Residential REIT, Inc. is a real estate investment trust launched and managed by ARMOUR Residential Management LLC. It invests in the real estate markets of the United States. The company has a P/E ratio of 5.76.

The average volume for ARMOUR Residential REIT has been 7,626,700 shares per day over the past 30 days. ARMOUR Residential REIT has a market cap of $1.7 billion and is part of the real estate industry. Shares are down 33.7% year to date as of the close of trading on Monday.

TheStreet Ratings rates ARMOUR Residential REIT 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 also find weaknesses including a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • ARR's very impressive revenue growth greatly exceeded the industry average of 12.1%. Since the same quarter one year prior, revenues leaped by 115.9%. 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, ARMOUR RESIDENTIAL REIT INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • ARMOUR RESIDENTIAL REIT INC's earnings per share declined by 39.6% 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, ARMOUR RESIDENTIAL REIT INC increased its bottom line by earning $0.97 versus $0.02 in the prior year. For the next year, the market is expecting a contraction of 14.4% in earnings ($0.83 versus $0.97).
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 34.83%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 39.58% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

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

Iamgold

Dividend Yield: 5.70%

Iamgold (NYSE: IAG) shares currently have a dividend yield of 5.70%.

IAMGOLD Corporation engages in the exploration, development, and operation of mining properties. Its products include gold, silver, niobium, and copper deposits. The company has a P/E ratio of 7.27.

The average volume for Iamgold has been 6,962,300 shares per day over the past 30 days. Iamgold has a market cap of $1.6 billion and is part of the metals & mining industry. Shares are down 64.3% year to date as of the close of trading on Monday.

TheStreet Ratings rates Iamgold 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, reasonable valuation levels 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 weak operating cash flow.

Highlights from the ratings report include:
  • IAG's debt-to-equity ratio is very low at 0.17 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 2.87, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for IAMGOLD CORP is rather high; currently it is at 52.20%. Regardless of IAG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.57% trails the industry average.
  • 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 Metals & Mining industry. The net income has significantly decreased by 90.8% when compared to the same quarter one year ago, falling from $119.20 million to $10.90 million.
  • Net operating cash flow has decreased to $99.50 million or 41.57% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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

Teck Resources

Dividend Yield: 4.10%

Teck Resources (NYSE: TCK) shares currently have a dividend yield of 4.10%.

Teck Resources Limited engages in exploring for, acquiring, developing, and producing natural resources in the Americas, Asia Pacific, Europe, and Africa. The company has a P/E ratio of 14.83.

The average volume for Teck Resources has been 3,204,700 shares per day over the past 30 days. Teck Resources has a market cap of $12.4 billion and is part of the metals & mining industry. Shares are down 44.2% year to date as of the close of trading on Monday.

TheStreet Ratings rates Teck Resources as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity.

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 Metals & Mining industry. The net income increased by 23.6% when compared to the same quarter one year prior, going from $258.00 million to $319.00 million.
  • The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.26, which clearly demonstrates the ability to cover short-term cash needs.
  • 42.70% is the gross profit margin for TECK RESOURCES LTD which we consider to be strong. Regardless of TCK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TCK's net profit margin of 13.69% compares favorably to the industry average.
  • TCK's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 33.26%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • 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. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, TECK RESOURCES LTD has outperformed in comparison with the industry average, but has underperformed when compared to 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.

Exelon

Dividend Yield: 4.10%

Exelon (NYSE: EXC) shares currently have a dividend yield of 4.10%.

Exelon Corporation, a utility services holding company, engages in the energy generation and distribution business in the United States. The company has a P/E ratio of 26.81.

The average volume for Exelon has been 6,957,100 shares per day over the past 30 days. Exelon has a market cap of $25.9 billion and is part of the utilities industry. Shares are up 3% year to date as of the close of trading on Monday.

TheStreet Ratings rates Exelon as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 13.8%. Since the same quarter one year prior, revenues rose by 29.7%. 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 debt-to-equity ratio is somewhat low, currently at 0.93, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that EXC's debt-to-equity ratio is low, the quick ratio, which is currently 0.62, displays a potential problem in covering short-term cash needs.
  • EXELON CORP 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, EXELON CORP reported lower earnings of $1.40 versus $3.75 in the prior year. This year, the market expects an improvement in earnings ($2.50 versus $1.40).
  • The gross profit margin for EXELON CORP is rather low; currently it is at 18.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.06% trails that of the industry average.
  • Net operating cash flow has decreased to $859.00 million or 13.58% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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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