5 Hold-Rated Dividend Stocks: LINE, BDN, HCN, EXC, ECA

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

Linn Energy

Dividend Yield: 11.50%

Linn Energy (NASDAQ: LINE) shares currently have a dividend yield of 11.50%.

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 4,159,500 shares per day over the past 30 days. Linn Energy has a market cap of $6.3 billion and is part of the energy industry. Shares are down 23% year to date as of the close of trading on Wednesday.

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 6.2%. 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 -86.32%.
  • 40.39% 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.

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

Brandywine Realty

Dividend Yield: 4.40%

Brandywine Realty (NYSE: BDN) shares currently have a dividend yield of 4.40%.

Brandywine Realty Trust is a publicly owned real estate investment firm. The firm engages in the engaged in the ownership, management, leasing, acquisition, and development of office and industrial properties. It primarily manages Class-A, suburban and urban office portfolio.

The average volume for Brandywine Realty has been 1,274,400 shares per day over the past 30 days. Brandywine Realty has a market cap of $2.1 billion and is part of the real estate industry. Shares are up 11.5% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Brandywine Realty as a hold. The company's strengths can be seen in multiple areas, such as its 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 profit margins have been poor overall.

Highlights from the ratings report include:
  • BDN's revenue growth has slightly outpaced the industry average of 7.0%. Since the same quarter one year prior, revenues rose by 14.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 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, BRANDYWINE REALTY TRUST's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for BRANDYWINE REALTY TRUST is currently lower than what is desirable, coming in at 27.50%. Regardless of BDN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, BDN's net profit margin of 4.61% 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.

Health Care REIT

Dividend Yield: 4.80%

Health Care REIT (NYSE: HCN) shares currently have a dividend yield of 4.80%.

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 82.14.

The average volume for Health Care REIT has been 2,255,700 shares per day over the past 30 days. Health Care REIT has a market cap of $18.0 billion and is part of the real estate industry. Shares are up 2.4% year to date as of the close of trading on Wednesday.

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, poor profit margins and relatively poor performance when compared with the S&P 500 during the past year.

Highlights from the ratings report include:
  • HCN's very impressive revenue growth greatly exceeded the industry average of 7.0%. 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.
  • Net operating cash flow has increased to $199.81 million or 14.80% when compared to the same quarter last year. In addition, HEALTH CARE REIT INC has also vastly surpassed the industry average cash flow growth rate of -81.00%.
  • 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 16.12%. 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.

Exelon

Dividend Yield: 4.10%

Exelon (NYSE: EXC) shares currently have a dividend yield of 4.10%.

Exelon Corporation, a utility services holding company, engages in the energy generation and distribution business in the United States. The company has a P/E ratio of 25.00.

The average volume for Exelon has been 6,309,200 shares per day over the past 30 days. Exelon has a market cap of $25.9 billion and is part of the utilities industry. Shares are up 3.7% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Exelon as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and weak operating cash flow.

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 Electric Utilities industry. The net income increased by 71.3% when compared to the same quarter one year prior, rising from $286.00 million to $490.00 million.
  • EXC's revenue growth trails the industry average of 17.3%. Since the same quarter one year prior, revenues slightly increased by 3.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.93, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that EXC's debt-to-equity ratio is low, the quick ratio, which is currently 0.62, displays a potential problem in covering short-term cash needs.
  • EXC has underperformed the S&P 500 Index, declining 19.48% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • 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. When compared to other companies in the Electric Utilities industry and the overall market, EXELON 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.

Encana

Dividend Yield: 4.50%

Encana (NYSE: ECA) shares currently have a dividend yield of 4.50%.

Encana Corporation and its subsidiaries engage in the exploration for, development, production, and marketing of natural gas, oil, and natural gas liquids in Canada and the United States.

The average volume for Encana has been 4,390,300 shares per day over the past 30 days. Encana has a market cap of $13.1 billion and is part of the energy industry. Shares are down 12.2% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Encana as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:
  • ECA's very impressive revenue growth greatly exceeded the industry average of 6.2%. Since the same quarter one year prior, revenues leaped by 171.4%. 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 significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 149.3% when compared to the same quarter one year prior, rising from -$1,482.00 million to $730.00 million.
  • ENCANA CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, ENCANA CORP swung to a loss, reporting -$3.79 versus $0.15 in the prior year.
  • ECA has underperformed the S&P 500 Index, declining 21.64% 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.
  • The debt-to-equity ratio of 1.45 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, ECA's quick ratio is somewhat strong at 1.41, demonstrating the ability to handle short-term liquidity 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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