5 Hold-Rated Dividend Stocks: KFN, NKA, APTS, DSWL, VALU

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."

KKR Financial Holdings

Dividend Yield: 8.20%

KKR Financial Holdings (NYSE: KFN ) shares currently have a dividend yield of 8.20%.

KKR Financial Holdings LLC, together with its subsidiaries, operates as a specialty finance company with expertise in a range of asset classes. The company has a P/E ratio of 5.51

The average volume for KKR Financial Holdings has been 798,600 shares per day over the past 30 days KKR Financial Holdings has a market cap of $2.1 billion and is part of the real estate industry Shares are down 1.1% year to date as of the close of trading on Tuesday

TheStreet Ratings rates KKR Financial Holdings as a hold . The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and increase in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 4.1%. Since the same quarter one year prior, revenues rose by 17.2%. 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 KKR FINANCIAL HOLDINGS LLC is currently very high, coming in at 77.40%. It has increased significantly from the same period last year. Along with this, the net profit margin of 40.33% significantly outperformed against the industry average.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Diversified Financial Services industry average. The net income increased by 11.7% when compared to the same quarter one year prior, going from $88.05 million to $98.34 million.
  • Net operating cash flow has decreased to $39.68 million or 11.26% 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 debt-to-equity ratio is very high at 2.43 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.

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Niska Gas Storage Partners

Dividend Yield: 9.90%

Niska Gas Storage Partners (NYSE: NKA ) shares currently have a dividend yield of 9.90%.

Niska Gas Storage Partners LLC owns and operates natural gas storage assets in North America.

The average volume for Niska Gas Storage Partners has been 159,400 shares per day over the past 30 days Niska Gas Storage Partners has a market cap of $486.7 million and is part of the utilities industry Shares are up 32.6% year to date as of the close of trading on Tuesday

TheStreet Ratings rates Niska Gas Storage Partners as a hold . The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and generally higher debt management risk.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, NKA's share price has jumped by 42.81%, exceeding the performance of the broader market during that same time frame. 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.
  • Net operating cash flow has significantly increased by 383.19% to $73.07 million when compared to the same quarter last year. In addition, NISKA GAS STORAGE PARTNERS has also vastly surpassed the industry average cash flow growth rate of -25.51%.
  • NISKA GAS STORAGE PARTNERS 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, NISKA GAS STORAGE PARTNERS continued to lose money by earning -$0.63 versus -$2.38 in the prior year. This year, the market expects an improvement in earnings ($0.60 versus -$0.63).
  • The debt-to-equity ratio of 1.21 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, NKA maintains a poor quick ratio of 0.98, which illustrates the inability to avoid short-term cash problems.
  • 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 108.2% when compared to the same quarter one year ago, falling from $15.64 million to -$1.28 million.

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Preferred Apartment Communities

Dividend Yield: 7.40%

Preferred Apartment Communities (AMEX: APTS ) shares currently have a dividend yield of 7.40%.

Preferred Apartment Communities, Inc. is a real estate investment trust launched and managed by Preferred Apartment Advisors, LLC. The fund invests in real estate markets of the United States. It primarily acquires and operates multifamily apartment properties.

The average volume for Preferred Apartment Communities has been 32,400 shares per day over the past 30 days Preferred Apartment Communities is part of the real estate industry Shares are up 3.9% year to date as of the close of trading on Tuesday

TheStreet Ratings rates Preferred Apartment Communities as a hold . The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • APTS's very impressive revenue growth greatly exceeded the industry average of 12.1%. Since the same quarter one year prior, revenues leaped by 127.4%. 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.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. 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.
  • 36.50% is the gross profit margin for PREFERRED APARTMENT CMNTYS which we consider to be strong. Regardless of APTS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, APTS's net profit margin of -52.14% significantly underperformed when compared to 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 554.9% when compared to the same quarter one year ago, falling from -$0.48 million to -$3.12 million.
  • Net operating cash flow has decreased to $0.76 million or 18.44% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, PREFERRED APARTMENT CMNTYS has marginally lower results.

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Deswell Industries

Dividend Yield: 8.00%

Deswell Industries (NASDAQ: DSWL ) shares currently have a dividend yield of 8.00%.

Deswell Industries, Inc. engages in the manufacture and sale of injection-molded plastic parts and components, electronic products and subassemblies, and metallic molds and accessory parts for original equipment manufacturers and contract manufacturers.

The average volume for Deswell Industries has been 17,700 shares per day over the past 30 days Deswell Industries has a market cap of $41.0 million and is part of the consumer non-durables industry Shares are up 4.2% year to date as of the close of trading on Tuesday

TheStreet Ratings rates Deswell Industries 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 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, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • DSWL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.17, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has slightly increased to $2.21 million or 8.03% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -30.83%.
  • DSWL, with its decline in revenue, underperformed when compared the industry average of 0.7%. Since the same quarter one year prior, revenues fell by 22.0%. 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 Chemicals industry and the overall market, DESWELL INDUSTRIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for DESWELL INDUSTRIES INC is currently extremely low, coming in at 13.90%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -21.00% is significantly below that of 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.

Value Line

Dividend Yield: 7.50%

Value Line (NASDAQ: VALU ) shares currently have a dividend yield of 7.50%.

Value Line, Inc. engages in the production of investment related periodical publications primarily in the United States. The company provides investment related periodicals covering various investments, such as stocks, mutual funds, options, and convertible securities. The company has a P/E ratio of 12.75

The average volume for Value Line has been 4,200 shares per day over the past 30 days Value Line has a market cap of $79.3 million and is part of the financial services industry Shares are down 7.8% year to date as of the close of trading on Tuesday

TheStreet Ratings rates Value Line as a hold . The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and notable return on equity. 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 poor profit margins.

Highlights from the ratings report include:
  • VALU has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Despite the fact that VALU's debt-to-equity ratio is low, the quick ratio, which is currently 0.57, displays a potential problem in covering short-term cash needs.
  • VALU, with its decline in revenue, slightly underperformed the industry average of 1.4%. Since the same quarter one year prior, revenues slightly dropped by 0.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The gross profit margin for VALUE LINE INC is rather low; currently it is at 16.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 19.52% trails that of the industry average.
  • Net operating cash flow has significantly decreased to $1.38 million or 54.65% 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.

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