4 Hold-Rated Dividend Stocks: PMT, SIR, RRD, IVR

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."

PennyMac Mortgage Investment

Dividend Yield: 10.00%

PennyMac Mortgage Investment (NYSE: PMT) shares currently have a dividend yield of 10.00%.

PennyMac Mortgage Investment Trust, a specialty finance company, through its subsidiaries, invests primarily in residential mortgage loans and mortgage-related assets. The company operates in two segments, Correspondent Lending and Investment Activities. The company has a P/E ratio of 6.72.

The average volume for PennyMac Mortgage Investment has been 1,014,300 shares per day over the past 30 days. PennyMac Mortgage Investment has a market cap of $1.3 billion and is part of the real estate industry. Shares are down 8.5% year to date as of the close of trading on Friday.

TheStreet Ratings rates PennyMac Mortgage Investment as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we find that the stock has experienced relatively poor performance when compared with the S&P 500 during the past year.

Highlights from the ratings report include:
  • PMT's very impressive revenue growth greatly exceeded the industry average of 9.2%. Since the same quarter one year prior, revenues leaped by 101.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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, PENNYMAC MORTGAGE INVEST TR's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for PENNYMAC MORTGAGE INVEST TR is rather high; currently it is at 63.27%. Regardless of PMT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PMT's net profit margin of 42.01% significantly outperformed against the industry.
  • In its most recent trading session, PMT 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. 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.

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

Select Income REIT

Dividend Yield: 6.80%

Select Income REIT (NYSE: SIR) shares currently have a dividend yield of 6.80%.

Select Income REIT is a real estate investment trust managed by Reit Management & Research LLC. The firm invests in the real estate markets of United States with a focus on Hawaii. The fund seeks to invest in office and industrial properties. Select Income REIT is domiciled in United States. The company has a P/E ratio of 12.31.

The average volume for Select Income REIT has been 465,300 shares per day over the past 30 days. Select Income REIT has a market cap of $1.3 billion and is part of the real estate industry. Shares are up 5.3% year to date as of the close of trading on Friday.

TheStreet Ratings rates Select Income REIT as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and attractive valuation levels. However, as a counter to these strengths, we find that the stock has experienced relatively poor performance when compared with the S&P 500 during the past year.

Highlights from the ratings report include:
  • SIR's very impressive revenue growth greatly exceeded the industry average of 9.2%. Since the same quarter one year prior, revenues leaped by 64.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • SELECT INCOME REIT has improved earnings per share by 18.4% 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, SELECT INCOME REIT increased its bottom line by earning $2.10 versus $0.57 in the prior year. This year, the market expects an improvement in earnings ($2.12 versus $2.10).
  • When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, SELECT INCOME REIT's return on equity is below that of both the industry average and the S&P 500.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Real Estate Investment Trusts (REITs) industry average, but is greater than that of the S&P 500. The net income increased by 48.6% when compared to the same quarter one year prior, rising from $15.33 million to $22.79 million.
  • In its most recent trading session, SIR 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. 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.

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

R.R. Donnelley & Sons Company

Dividend Yield: 5.50%

R.R. Donnelley & Sons Company (NASDAQ: RRD) shares currently have a dividend yield of 5.50%.

R.R. Donnelley & Sons Company provides integrated communication solutions to private and public sectors worldwide.

The average volume for R.R. Donnelley & Sons Company has been 2,021,300 shares per day over the past 30 days. R.R. Donnelley & Sons Company has a market cap of $3.5 billion and is part of the diversified services industry. Shares are up 112.2% year to date as of the close of trading on Friday.

TheStreet Ratings rates R.R. Donnelley & Sons Company as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. 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:
  • RRD's revenue growth has slightly outpaced the industry average of 6.9%. Since the same quarter one year prior, revenues slightly increased by 1.7%. 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.
  • Compared to its closing price of one year ago, RRD's share price has jumped by 46.76%, exceeding the performance of the broader market during that same time frame. 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.
  • The gross profit margin for DONNELLEY (R R) & SONS CO is rather low; currently it is at 23.26%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.54% trails 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 against the S&P 500 and did not exceed that of the Commercial Services & Supplies industry. The net income has significantly decreased by 26.4% when compared to the same quarter one year ago, falling from $88.80 million to $65.40 million.

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: 16.50%

Invesco Mortgage Capital (NYSE: IVR) shares currently have a dividend yield of 16.50%.

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 5.08.

The average volume for Invesco Mortgage Capital has been 2,202,900 shares per day over the past 30 days. Invesco Mortgage Capital has a market cap of $2.1 billion and is part of the real estate industry. Shares are down 20.2% 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, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 9.2%. Since the same quarter one year prior, revenues rose by 26.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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, INVESCO MORTGAGE CAPITAL INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for INVESCO MORTGAGE CAPITAL INC is currently very high, coming in at 91.84%. 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 79.59% significantly outperformed against the industry.
  • INVESCO MORTGAGE CAPITAL INC has improved earnings per share by 39.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings 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 12.6% in earnings ($2.53 versus $2.89).
  • IVR has underperformed the S&P 500 Index, declining 18.15% 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.

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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