4 Hold-Rated Dividend Stocks: NLY, HME, RWT, BBEP

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."

Annaly Capital Management

Dividend Yield: 13.80%

Annaly Capital Management (NYSE: NLY) shares currently have a dividend yield of 13.80%.

Annaly Capital Management, Inc. owns, manages, and finances a portfolio of real estate related investments in United States. The company has a P/E ratio of 6.86.

The average volume for Annaly Capital Management has been 13,501,800 shares per day over the past 30 days. Annaly Capital Management has a market cap of $11.0 billion and is part of the real estate industry. Shares are down 17.4% year to date as of the close of trading on Friday.

TheStreet Ratings rates Annaly Capital Management as a hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The gross profit margin for ANNALY CAPITAL MANAGEMENT is currently very high, coming in at 94.49%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 92.42% significantly outperformed against the industry average.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, ANNALY CAPITAL MANAGEMENT has outperformed in comparison with the industry average, but has underperformed when compared to that of 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 greatly underperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income has decreased by 3.5% when compared to the same quarter one year ago, dropping from $901.81 million to $870.28 million.
  • Net operating cash flow has significantly decreased to -$3,882.25 million or 177.73% 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.

Home Properties

Dividend Yield: 4.40%

Home Properties (NYSE: HME) shares currently have a dividend yield of 4.40%.

Home Properties, Inc. is an independent real estate investment trust. The firm invests in the real estate markets of the United States. It is engaged in the ownership, management, acquisition, rehabilitation and development of residential apartment communities. The company has a P/E ratio of 28.54.

The average volume for Home Properties has been 544,900 shares per day over the past 30 days. Home Properties has a market cap of $3.6 billion and is part of the real estate industry. Shares are up 1.5% year to date as of the close of trading on Friday.

TheStreet Ratings rates Home Properties as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • HME's revenue growth has slightly outpaced the industry average of 7.0%. Since the same quarter one year prior, revenues slightly increased by 8.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • HOME PROPERTIES INC 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, HOME PROPERTIES INC increased its bottom line by earning $1.26 versus $0.81 in the prior year. For the next year, the market is expecting a contraction of 4.0% in earnings ($1.21 versus $1.26).
  • In its most recent trading session, HME 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. 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.
  • The gross profit margin for HOME PROPERTIES INC is currently lower than what is desirable, coming in at 34.07%. Regardless of HME's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, HME's net profit margin of 16.17% is significantly lower than 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.

Redwood

Dividend Yield: 6.60%

Redwood (NYSE: RWT) shares currently have a dividend yield of 6.60%.

Redwood Trust, Inc. engages in investing, financing, and managing real estate-related assets. The company has a P/E ratio of 8.83.

The average volume for Redwood has been 1,201,000 shares per day over the past 30 days. Redwood has a market cap of $1.4 billion and is part of the real estate industry. Shares are unchanged year to date as of the close of trading on Friday.

TheStreet Ratings rates Redwood as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. 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:
  • Powered by its strong earnings growth of 86.48% and other important driving factors, this stock has surged by 32.86% 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.
  • REDWOOD TRUST INC 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, REDWOOD TRUST INC increased its bottom line by earning $1.59 versus $0.31 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $1.59).
  • The gross profit margin for REDWOOD TRUST INC is rather high; currently it is at 59.58%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, RWT's net profit margin of 113.23% significantly outperformed against the industry.
  • RWT, with its decline in revenue, underperformed when compared the industry average of 7.0%. Since the same quarter one year prior, revenues slightly dropped by 8.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Net operating cash flow has decreased to -$287.03 million or 22.83% when compared to the same quarter last year. Despite a decrease in cash flow of 22.83%, REDWOOD TRUST INC is still significantly exceeding the industry average of -81.00%.

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

BreitBurn Energy Partners

Dividend Yield: 10.50%

BreitBurn Energy Partners (NASDAQ: BBEP) shares currently have a dividend yield of 10.50%.

BreitBurn Energy Partners L.P. engages in the acquisition, exploitation, and development of oil and gas properties in the United States.

The average volume for BreitBurn Energy Partners has been 1,026,200 shares per day over the past 30 days. BreitBurn Energy Partners has a market cap of $1.8 billion and is part of the energy industry. Shares are down 1.4% year to date as of the close of trading on Friday.

TheStreet Ratings rates BreitBurn Energy Partners as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • BBEP's very impressive revenue growth greatly exceeded the industry average of 6.2%. Since the same quarter one year prior, revenues leaped by 63.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 27.4% when compared to the same quarter one year prior, rising from -$49.97 million to -$36.30 million.
  • BREITBURN ENERGY PARTNERS LP reported significant earnings per share improvement 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, BREITBURN ENERGY PARTNERS LP swung to a loss, reporting -$0.60 versus $1.61 in the prior year. This year, the market expects an improvement in earnings ($0.41 versus -$0.60).
  • Net operating cash flow has decreased to $58.85 million or 17.45% when compared to the same quarter last year. Despite a decrease in cash flow of 17.45%, BREITBURN ENERGY PARTNERS LP is still significantly exceeding the industry average of -86.32%.
  • 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, BREITBURN ENERGY PARTNERS LP'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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