4 Hold-Rated Dividend Stocks: ISIL, HTS, ECA, KMI

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."

Intersil Corporation

Dividend Yield: 4.40%

Intersil Corporation (NASDAQ: ISIL) shares currently have a dividend yield of 4.40%.

Intersil Corporation designs, develops, manufactures, and markets analog, mixed-signal, and power management integrated circuits (ICs) for applications in the industrial and infrastructure, personal computing, and consumer electronics markets.

The average volume for Intersil Corporation has been 1,233,700 shares per day over the past 30 days. Intersil Corporation has a market cap of $1.4 billion and is part of the electronics industry. Shares are up 29.7% year to date as of the close of trading on Friday.

TheStreet Ratings rates Intersil Corporation as a hold. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, increase in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 106.9% when compared to the same quarter one year prior, rising from -$14.49 million to $1.00 million.
  • INTERSIL CORP 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, INTERSIL CORP swung to a loss, reporting -$0.29 versus $0.53 in the prior year. This year, the market expects an improvement in earnings ($0.53 versus -$0.29).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 12.9%. Since the same quarter one year prior, revenues fell by 11.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 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 Semiconductors & Semiconductor Equipment industry and the overall market, INTERSIL CORP'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.

Hatteras Financial Corporation

Dividend Yield: 14.80%

Hatteras Financial Corporation (NYSE: HTS) shares currently have a dividend yield of 14.80%.

Hatteras Financial Corp. operates as an externally-managed mortgage real estate investment trust (REIT) in the United States. The company has a P/E ratio of 5.98.

The average volume for Hatteras Financial Corporation has been 1,242,300 shares per day over the past 30 days. Hatteras Financial Corporation has a market cap of $1.9 billion and is part of the real estate industry. Shares are down 26.2% year to date as of the close of trading on Friday.

TheStreet Ratings rates Hatteras Financial Corporation as a hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, unimpressive growth in net income and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The gross profit margin for HATTERAS FINANCIAL CORP is currently very high, coming in at 94.41%. Regardless of HTS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HTS's net profit margin of 56.92% significantly outperformed against the industry.
  • Net operating cash flow has slightly increased to $106.84 million or 3.62% when compared to the same quarter last year. Despite an increase in cash flow, HATTERAS FINANCIAL CORP's average is still marginally south of the industry average growth rate of 6.26%.
  • HATTERAS FINANCIAL CORP's earnings per share declined by 27.5% 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, HATTERAS FINANCIAL CORP reported lower earnings of $3.65 versus $3.96 in the prior year. For the next year, the market is expecting a contraction of 34.0% in earnings ($2.41 versus $3.65).
  • 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 Real Estate Investment Trusts (REITs) industry. The net income has decreased by 20.6% when compared to the same quarter one year ago, dropping from $89.14 million to $70.74 million.

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 4,332,100 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 10.5% year to date as of the close of trading on Friday.

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 10.1%. 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 20.62% 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.

Kinder Morgan

Dividend Yield: 4.30%

Kinder Morgan (NYSE: KMI) shares currently have a dividend yield of 4.30%.

Kinder Morgan, Inc. owns and operates energy transportation and storage assets in the United States and Canada. The company operates in six segments: Natural Gas Pipelines, Products Pipelines KMP, CO2 KMP, Terminals KMP, Kinder Morgan Canada KMP, and Other. The company has a P/E ratio of 36.87.

The average volume for Kinder Morgan has been 3,941,300 shares per day over the past 30 days. Kinder Morgan has a market cap of $39.0 billion and is part of the energy industry. Shares are up 6% year to date as of the close of trading on Friday.

TheStreet Ratings rates Kinder Morgan as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

Highlights from the ratings report include:
  • KMI's very impressive revenue growth greatly exceeded the industry average of 10.1%. Since the same quarter one year prior, revenues leaped by 56.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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 319.8% when compared to the same quarter one year prior, rising from -$126.00 million to $277.00 million.
  • KINDER MORGAN 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, KINDER MORGAN INC increased its bottom line by earning $1.22 versus $0.55 in the prior year. For the next year, the market is expecting a contraction of 4.9% in earnings ($1.16 versus $1.22).
  • 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, KINDER MORGAN INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The debt-to-equity ratio is very high at 2.60 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 0.34, 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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