4 Hold-Rated Dividend Stocks: RRD, AEC, NS, BGCP

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 4 stocks with substantial yields, that ultimately, we have rated "Hold."

R.R. Donnelley & Sons Company

Dividend Yield: 7.50%

R.R. Donnelley & Sons Company (NASDAQ: RRD) shares currently have a dividend yield of 7.50%.

R.R. Donnelley & Sons Company provides integrated communication solutions to private and public sectors worldwide.

The average volume for R.R. Donnelley & Sons Company has been 1,815,800 shares per day over the past 30 days R.R. Donnelley & Sons Company has a market cap of $2.5 billion and is part of the diversified services industry Shares are up 53.7% year to date as of the close of trading on Wednesday

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

Highlights from the ratings report include:
  • RRD's revenue growth has slightly outpaced the industry average of 9.1%. Since the same quarter one year prior, revenues slightly increased by 0.5%. 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.
  • 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. 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.
  • DONNELLEY (R R) & SONS CO's earnings per share declined by 28.6% in the most recent quarter compared to 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, DONNELLEY (R R) & SONS CO reported poor results of -$3.61 versus -$0.73 in the prior year. This year, the market expects an improvement in earnings ($1.63 versus -$3.61).
  • The gross profit margin for DONNELLEY (R R) & SONS CO is rather low; currently it is at 22.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.06% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$95.80 million or 84.23% 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.

Associated Estates Realty

Dividend Yield: 4.80%

Associated Estates Realty (NYSE: AEC) shares currently have a dividend yield of 4.80%.

Associated Estates Realty Corporation is an independent real estate investment trust. The firm invests in the real estate markets of the United States. It specializes in owning and managing apartment communities in the Midwest, Mid-Atlantic and Southeast regions of the United States. The company has a P/E ratio of 104.93

The average volume for Associated Estates Realty has been 698,600 shares per day over the past 30 days Associated Estates Realty has a market cap of $794.6 million and is part of the real estate industry Shares are down 2.9% year to date as of the close of trading on Wednesday

TheStreet Ratings rates Associated Estates Realty 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 compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including relatively poor performance when compared with the S&P 500 during the past year and poor profit margins.

Highlights from the ratings report include:
  • AEC's revenue growth has slightly outpaced the industry average of 12.1%. Since the same quarter one year prior, revenues rose by 17.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ASSOCIATED ESTATES RLTY CORP 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ASSOCIATED ESTATES RLTY CORP turned its bottom line around by earning $0.03 versus -$0.27 in the prior year. This year, the market expects an improvement in earnings ($0.36 versus $0.03).
  • The gross profit margin for ASSOCIATED ESTATES RLTY CORP is rather low; currently it is at 18.40%. Regardless of AEC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 22.99% trails the industry average.
  • In its most recent trading session, AEC 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. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.

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: 9.80%

NuStar Energy L.P (NYSE: NS) shares currently have a dividend yield of 9.80%.

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 308,500 shares per day over the past 30 days NuStar Energy L.P has a market cap of $3.5 billion and is part of the energy industry Shares are up 7.9% year to date as of the close of trading on Wednesday

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 -25.51%.
  • NS, with its decline in revenue, underperformed when compared the industry average of 10.7%. 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 ($1.70 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.

BGC Partners

Dividend Yield: 8.50%

BGC Partners (NASDAQ: BGCP) shares currently have a dividend yield of 8.50%.

BGC Partners, Inc. operates as a brokerage company, primarily servicing the wholesale financial and real estate markets. It operates through two segments, Financial Services and Real Estate Services. The company has a P/E ratio of 40.29

The average volume for BGC Partners has been 2,180,600 shares per day over the past 30 days BGC Partners has a market cap of $751.2 million and is part of the financial services industry Shares are up 67.6% year to date as of the close of trading on Wednesday

TheStreet Ratings rates BGC Partners as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and poor profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.3%. Since the same quarter one year prior, revenues rose by 12.7%. 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.
  • Net operating cash flow has significantly increased by 163.76% to $7.52 million when compared to the same quarter last year. In addition, BGC PARTNERS INC has also vastly surpassed the industry average cash flow growth rate of -303.26%.
  • The gross profit margin for BGC PARTNERS INC is currently extremely low, coming in at 9.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.57% significantly trails the industry average.
  • The share price of BGC PARTNERS INC has not done very well: it is down 11.60% 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. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

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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