3 Hold-Rated Dividend Stocks: TCPC, QCCO, RAS

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

TCP Capital

Dividend Yield: 8.90%

TCP Capital (NASDAQ: TCPC) shares currently have a dividend yield of 8.90%.

TCP Capital Corp. is a business development company specializing in investments in debt of public and private middle market companies. The fund also provides leveraged loans. It seeks to invests in the United States. The company has a P/E ratio of 13.38

The average volume for TCP Capital has been 246,300 shares per day over the past 30 days TCP Capital has a market cap of $347.7 million and is part of the real estate industry Shares are up 9.8% year to date as of the close of trading on Wednesday

TheStreet Ratings rates TCP Capital as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in stock price during the past year and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 6.3%. Since the same quarter one year prior, revenues rose by 42.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
  • Net operating cash flow has remained constant at $6.11 million with no significant change when compared to the same quarter last year. Even though TCP CAPITAL CORP's cash flow growth was minimal, the firm managed to surpass its industry's average growth rate of -303.26%.
  • When compared to other companies in the Capital Markets industry and the overall market, TCP CAPITAL CORP's return on equity is below that of both the industry average and 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.

QC Holdings

Dividend Yield: 7.20%

QC Holdings (NASDAQ: QCCO) shares currently have a dividend yield of 7.20%.

QC Holdings, Inc. and its subsidiaries provide various retail consumer financial products and services in the United States. The company offers payday loans, which provide cash to the customers in exchange for a promissory note with a maturity of two to three weeks. The company has a P/E ratio of 10.33

The average volume for QC Holdings has been 8,100 shares per day over the past 30 days QC Holdings has a market cap of $48.6 million and is part of the banking industry Shares are down 13.9% year to date as of the close of trading on Tuesday

TheStreet Ratings rates QC Holdings 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 attractive valuation levels. 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:
  • QCCO's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, QCCO has a quick ratio of 2.47, which demonstrates the ability of the company to cover short-term liquidity needs.
  • QCCO, with its decline in revenue, slightly underperformed the industry average of 3.9%. Since the same quarter one year prior, revenues slightly dropped by 4.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for QC HOLDINGS INC is currently lower than what is desirable, coming in at 34.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.79% significantly trails the industry average.
  • Net operating cash flow has declined marginally to $15.18 million or 7.88% 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.

Rait Financial

Dividend Yield: 7.30%

Rait Financial (NYSE: RAS) shares currently have a dividend yield of 7.30%.

RAIT Financial Trust operates as a self-managed and self-advised real estate investment trust (REIT). The company, through its subsidiaries, invests in, manages, and services real estate-related assets with a focus on commercial real estate.

The average volume for Rait Financial has been 841,300 shares per day over the past 30 days Rait Financial has a market cap of $500.2 million and is part of the real estate industry Shares are up 28.2% year to date as of the close of trading on Wednesday

TheStreet Ratings rates Rait Financial as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. 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:
  • RAS's revenue growth has slightly outpaced the industry average of 12.1%. Since the same quarter one year prior, revenues rose by 21.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 38.01% and other important driving factors, this stock has surged by 57.17% 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.
  • RAIT FINANCIAL TRUST has improved earnings per share by 38.0% in the most recent quarter compared to 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, RAIT FINANCIAL TRUST reported poor results of -$3.92 versus -$1.36 in the prior year. This year, the market expects an improvement in earnings ($0.84 versus -$3.92).
  • The gross profit margin for RAIT FINANCIAL TRUST is rather low; currently it is at 22.00%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, RAS's net profit margin of -129.63% significantly underperformed when compared to the industry average.
  • 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, RAIT FINANCIAL TRUST's return on equity significantly trails that of both the industry average and 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.

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