4 Hold-Rated Dividend Stocks: RGP, RIG, OZM, BP

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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."

Regency Energy Partners

Dividend Yield: 6.50%

Regency Energy Partners (NYSE: RGP) shares currently have a dividend yield of 6.50%.

Regency Energy Partners LP engages in gathering, treating, processing, compressing, and transporting natural gas and natural gas liquids (NGLs). The company operates in Gathering and Processing, Natural Gas Transportation, NGL Services, and Contract Services segments.

The average volume for Regency Energy Partners has been 709,400 shares per day over the past 30 days. Regency Energy Partners has a market cap of $5.7 billion and is part of the energy industry. Shares are up 30% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Regency Energy Partners as a hold. The company's strengths can be seen in multiple areas, such as its 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, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • Net operating cash flow has increased to $67.00 million or 19.49% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -25.84%.
  • 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. 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.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.7%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for REGENCY ENERGY PARTNERS LP is rather low; currently it is at 21.49%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.43% is significantly below that of 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 117.5% when compared to the same quarter one year ago, falling from $28.50 million to -$5.00 million.

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

Transocean

Dividend Yield: 4.50%

Transocean (NYSE: RIG) shares currently have a dividend yield of 4.50%.

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 18.17.

The average volume for Transocean has been 2,774,100 shares per day over the past 30 days. Transocean has a market cap of $17.9 billion and is part of the energy industry. Shares are up 12.1% year to date as of the close of trading on Tuesday.

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 ($4.30 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.
  • RIG's debt-to-equity ratio of 0.70 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that RIG's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.73 is high and demonstrates strong liquidity.
  • 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. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, TRANSOCEAN LTD's return on equity is significantly below that of the industry average and is below that of 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.

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

Och-Ziff Capital Management Group

Dividend Yield: 9.80%

Och-Ziff Capital Management Group (NYSE: OZM) shares currently have a dividend yield of 9.80%.

Och-Ziff Capital Management Group LLC is a publicly owned investment manager. The firm provides investment advisory services for its clients. It invests in equity markets across the world. The firm makes its investments in alternative markets across the world.

The average volume for Och-Ziff Capital Management Group has been 1,148,700 shares per day over the past 30 days. Och-Ziff Capital Management Group has a market cap of $1.7 billion and is part of the financial services industry. Shares are up 20.7% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Och-Ziff Capital Management Group as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • OZM's very impressive revenue growth greatly exceeded the industry average of 6.0%. Since the same quarter one year prior, revenues leaped by 91.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 119.54% and other important driving factors, this stock has surged by 53.14% 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.
  • Net operating cash flow has significantly increased by 1922.49% to $581.25 million when compared to the same quarter last year. In addition, OCH-ZIFF CAPITAL MGMT LP has also vastly surpassed the industry average cash flow growth rate of -81.71%.
  • The gross profit margin for OCH-ZIFF CAPITAL MGMT LP is rather high; currently it is at 66.38%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.64% 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.

BP

Dividend Yield: 5.00%

BP (NYSE: BP) shares currently have a dividend yield of 5.00%.

BP p.l.c. provides fuel for transportation, energy for heat and light, lubricants to engines, and petrochemicals products. The company has a P/E ratio of 432.00.

The average volume for BP has been 5,320,600 shares per day over the past 30 days. BP has a market cap of $136.3 billion and is part of the energy industry. Shares are up 3.7% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates BP as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels and good cash flow from operations. 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:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 192.4% when compared to the same quarter one year prior, rising from $5,767.00 million to $16,863.00 million.
  • The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.90 is somewhat weak and could be cause for future problems.
  • The gross profit margin for BP PLC is currently extremely low, coming in at 14.46%. Regardless of BP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, BP's net profit margin of 17.91% compares favorably 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 Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, BP PLC has underperformed in comparison with the industry average, but has exceeded 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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