5 Hold-Rated Dividend Stocks: RIG, LINE, RPAI, VIP, CWH

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."

Transocean

Dividend Yield: 4.60%

Transocean (NYSE: RIG) shares currently have a dividend yield of 4.60%.

Transocean Ltd. provides offshore contract drilling services for oil and gas wells worldwide. It offers deepwater and harsh environment drilling, oil and gas drilling management, and drilling engineering and drilling project management services, as well as logistics services. The company has a P/E ratio of 17.85

The average volume for Transocean has been 2,958,200 shares per day over the past 30 days Transocean has a market cap of $17.5 billion and is part of the energy industry Shares are up 7.4% year to date as of the close of trading on Friday

TheStreet Ratings rates Transocean as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. 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:
  • TRANSOCEAN LTD 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, TRANSOCEAN LTD turned its bottom line around by earning $2.62 versus -$17.75 in the prior year. This year, the market expects an improvement in earnings ($4.39 versus $2.62).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 3110.0% when compared to the same quarter one year prior, rising from $10.00 million to $321.00 million.
  • 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.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Energy Equipment & Services industry and the overall market, TRANSOCEAN LTD's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $106.00 million or 80.37% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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Linn Energy

Dividend Yield: 9.30%

Linn Energy (NASDAQ: LINE) shares currently have a dividend yield of 9.30%.

Linn Energy, LLC, an independent oil and natural gas company, engages in the acquisition and development of oil and natural gas properties.

The average volume for Linn Energy has been 2,527,700 shares per day over the past 30 days Linn Energy has a market cap of $7.8 billion and is part of the energy industry Shares are down 6% year to date as of the close of trading on Friday

TheStreet Ratings rates Linn Energy as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 13.3%. Since the same quarter one year prior, revenues slightly increased by 4.2%. 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.
  • Net operating cash flow has significantly increased by 842.17% to $334.59 million when compared to the same quarter last year. In addition, LINN ENERGY LLC has also vastly surpassed the industry average cash flow growth rate of -24.27%.
  • 40.40% is the gross profit margin for LINN ENERGY LLC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, LINE's net profit margin of -60.12% significantly underperformed when compared to the industry average.
  • Currently the debt-to-equity ratio of 1.53 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.40, which clearly demonstrates the inability to cover short-term cash needs.
  • 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, LINN ENERGY LLC's return on equity significantly trails that of both the industry average and the S&P 500.

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Retail Properties of American

Dividend Yield: 4.60%

Retail Properties of American (NYSE: RPAI) shares currently have a dividend yield of 4.60%.

Inland Western Retail Real Estate Trust, Inc. is a real estate investment trust. It engages in acquisition, development and management of properties. The trust invests in the real estate markets of United States. The company has a P/E ratio of 493.00

The average volume for Retail Properties of American has been 986,400 shares per day over the past 30 days Retail Properties of American has a market cap of $2.6 billion and is part of the real estate industry Shares are up 19.3% year to date as of the close of trading on Friday

TheStreet Ratings rates Retail Properties of American as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and notable return on equity. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 66.66% and other important driving factors, this stock has surged by 49.89% over the past year, outperforming the rise in the S&P 500 Index during the same period.
  • 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 88.5% when compared to the same quarter one year prior, rising from -$16.29 million to -$1.88 million.
  • Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, RETAIL PPTYS OF AMERICA INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for RETAIL PPTYS OF AMERICA INC is rather low; currently it is at 24.90%. Regardless of RPAI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, RPAI's net profit margin of -1.34% significantly underperformed when compared to the industry average.
  • Net operating cash flow has decreased to $30.49 million or 13.56% 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.

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VimpelCom

Dividend Yield: 13.70%

VimpelCom (NYSE: VIP) shares currently have a dividend yield of 13.70%.

VimpelCom Ltd., a telecommunications service operator, provides voice and data services through a range of traditional and broadband mobile and fixed technologies. The company has a P/E ratio of 7.33

The average volume for VimpelCom has been 1,463,100 shares per day over the past 30 days VimpelCom has a market cap of $16.6 billion and is part of the telecommunications industry Shares are down 4.1% year to date as of the close of trading on Friday

TheStreet Ratings rates VimpelCom as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and notable return on equity. 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:
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 27.34% over the past year, a rise that has exceeded that of the S&P 500 Index. Although VIP had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Wireless Telecommunication Services industry average. The net income increased by 28.3% when compared to the same quarter one year prior, rising from $318.00 million to $408.00 million.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 2.6%. Since the same quarter one year prior, revenues slightly dropped by 0.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Net operating cash flow has decreased to $1,274.00 million or 20.72% when compared to the same quarter last year. Despite a decrease in cash flow of 20.72%, VIMPELCOM LTD is in line with the industry average cash flow growth rate of -26.86%.
  • Currently the debt-to-equity ratio of 1.89 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, VIP maintains a poor quick ratio of 0.84, which illustrates the inability to avoid short-term cash problems.

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

CommonWealth REIT

Dividend Yield: 4.40%

CommonWealth REIT (NYSE: CWH) shares currently have a dividend yield of 4.40%.

CommonWealth REIT is a real estate investment trust launched and managed by Reit Management & Research LLC. The fund invests in the real estate markets of the United States. It seeks to invest in office buildings, industrial buildings, and leased industrial land. The company has a P/E ratio of 51.65

The average volume for CommonWealth REIT has been 1,916,800 shares per day over the past 30 days CommonWealth REIT has a market cap of $2.7 billion and is part of the real estate industry Shares are up 46.1% year to date as of the close of trading on Friday

TheStreet Ratings rates CommonWealth REIT 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 increase in net income. 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:
  • CWH's revenue growth has slightly outpaced the industry average of 7.7%. Since the same quarter one year prior, revenues rose by 13.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • COMMONWEALTH REIT has improved earnings per share by 33.3% 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. During the past fiscal year, COMMONWEALTH REIT increased its bottom line by earning $0.34 versus $0.19 in the prior year.
  • 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, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • 36.67% is the gross profit margin for COMMONWEALTH REIT which we consider to be strong. Regardless of CWH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CWH's net profit margin of 9.17% is significantly lower than the industry average.
  • 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, COMMONWEALTH REIT underperformed against that of the industry average and is significantly less than 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.

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