4 Hold-Rated Dividend Stocks: VCI, HCN, IVR, WIN

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."

Valassis Communications

Dividend Yield: 5.00%

Valassis Communications (NYSE: VCI) shares currently have a dividend yield of 5.00%.

Valassis Communications, Inc., together with its subsidiaries, provides media solutions primarily in the United States and Europe. The company has a P/E ratio of 9.68

The average volume for Valassis Communications has been 468,700 shares per day over the past 30 days Valassis Communications has a market cap of $961.0 million and is part of the media industry Shares are down 4.6% year to date as of the close of trading on Friday

TheStreet Ratings rates Valassis Communications as a hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, 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 and poor profit margins.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 63.14% to $23.45 million when compared to the same quarter last year. In addition, VALASSIS COMMUNICATIONS INC has also vastly surpassed the industry average cash flow growth rate of 0.07%.
  • 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.
  • 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 greatly underperformed compared to the Media industry average. The net income has decreased by 18.0% when compared to the same quarter one year ago, dropping from $26.42 million to $21.67 million.
  • The gross profit margin for VALASSIS COMMUNICATIONS INC is currently lower than what is desirable, coming in at 27.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.49% significantly trails 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.

Health Care REIT

Dividend Yield: 4.60%

Health Care REIT (NYSE: HCN) shares currently have a dividend yield of 4.60%.

Health Care REIT, Inc. is an independent equity real estate investment trust. The firm engages in acquiring, planning, developing, managing, repositioning and monetizing of real estate assets. It primarily invests in the real estate markets of the United States. The company has a P/E ratio of 91.73

The average volume for Health Care REIT has been 2,407,400 shares per day over the past 30 days Health Care REIT has a market cap of $19.1 billion and is part of the real estate industry Shares are up 9.3% year to date as of the close of trading on Friday

TheStreet Ratings rates Health Care REIT as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and compelling growth in net income. 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:
  • HCN's very impressive revenue growth greatly exceeded the industry average of 12.1%. Since the same quarter one year prior, revenues leaped by 51.6%. 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 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 22.5% when compared to the same quarter one year prior, going from $58.51 million to $71.66 million.
  • HEALTH CARE REIT INC 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, HEALTH CARE REIT INC increased its bottom line by earning $0.45 versus $0.34 in the prior year. This year, the market expects an improvement in earnings ($0.85 versus $0.45).
  • 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 on the basis of return on equity, HEALTH CARE REIT INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for HEALTH CARE REIT INC is rather low; currently it is at 16.10%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 11.26% significantly trails 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.

Invesco Mortgage Capital

Dividend Yield: 15.60%

Invesco Mortgage Capital (NYSE: IVR) shares currently have a dividend yield of 15.60%.

Invesco Mortgage Capital Inc., a real estate investment trust (REIT), focuses on investing in, financing, and managing residential and commercial mortgage-backed securities and mortgage loans. It invests in residential mortgage-backed securities for which a U.S. The company has a P/E ratio of 6.70

The average volume for Invesco Mortgage Capital has been 1,995,400 shares per day over the past 30 days Invesco Mortgage Capital has a market cap of $2.3 billion and is part of the real estate industry Shares are down 16% year to date as of the close of trading on Friday

TheStreet Ratings rates Invesco Mortgage Capital as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and increase in net income. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • IVR'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 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 INVESCO MORTGAGE CAPITAL INC is currently very high, coming in at 92.70%. Regardless of IVR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, IVR's net profit margin of 53.49% significantly outperformed against the industry.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, IVR has underperformed the S&P 500 Index, declining 8.60% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • INVESCO MORTGAGE CAPITAL INC's earnings per share declined by 11.1% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, INVESCO MORTGAGE CAPITAL INC reported lower earnings of $2.89 versus $3.45 in the prior year. For the next year, the market is expecting a contraction of 13.5% in earnings ($2.50 versus $2.89).

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

Windstream

Dividend Yield: 12.80%

Windstream (NASDAQ: WIN) shares currently have a dividend yield of 12.80%.

Windstream Corporation provides communications and technology solutions in the United States. The company offers managed services and cloud computing services to businesses, as well as broadband, voice, and video services to consumers primarily in rural markets. The company has a P/E ratio of 30.37

The average volume for Windstream has been 7,380,200 shares per day over the past 30 days Windstream has a market cap of $4.6 billion and is part of the telecommunications industry Shares are down 6.9% year to date as of the close of trading on Friday

TheStreet Ratings rates Windstream as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity 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 weak operating cash flow.

Highlights from the ratings report include:
  • 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 Diversified Telecommunication Services industry and the overall market, WINDSTREAM CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for WINDSTREAM CORP is rather high; currently it is at 53.30%. Regardless of WIN'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 3.48% trails the industry average.
  • WIN, with its decline in revenue, slightly underperformed the industry average of 2.6%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 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 greatly underperformed compared to the Diversified Telecommunication Services industry average. The net income has decreased by 13.4% when compared to the same quarter one year ago, dropping from $60.40 million to $52.30 million.
  • The debt-to-equity ratio is very high at 8.79 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.32, which clearly demonstrates the inability to cover short-term cash needs.

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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