5 Hold-Rated Dividend Stocks: HR, AGNC, POT, RRD, CM

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."

Healthcare Realty

Dividend Yield: 5.30%

Healthcare Realty (NYSE: HR) shares currently have a dividend yield of 5.30%.

Healthcare Realty Trust Incorporated is an independent real estate investment trust. The firm invests in real estate markets of the United States.

The average volume for Healthcare Realty has been 766,200 shares per day over the past 30 days. Healthcare Realty has a market cap of $2.1 billion and is part of the real estate industry. Shares are down 6.2% year to date as of the close of trading on Monday.

TheStreet Ratings rates Healthcare Realty as a hold. Among the primary strengths of the company is its revenue growth. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.8%. Since the same quarter one year prior, revenues slightly increased by 8.3%. 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.
  • HEALTHCARE REALTY TRUST 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 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, HEALTHCARE REALTY TRUST INC turned its bottom line around by earning $0.10 versus -$0.04 in the prior year.
  • The share price of HEALTHCARE REALTY TRUST INC has not done very well: it is down 7.85% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The gross profit margin for HEALTHCARE REALTY TRUST INC is currently lower than what is desirable, coming in at 26.15%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -28.72% is significantly below that of the industry average.
  • Net operating cash flow has declined marginally to $40.42 million or 3.43% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, HEALTHCARE REALTY TRUST INC has marginally lower results.

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

American Capital Agency

Dividend Yield: 18.40%

American Capital Agency (NASDAQ: AGNC) shares currently have a dividend yield of 18.40%.

American Capital Agency Corp. operates as a real estate investment trust (REIT). The company has a P/E ratio of 2.77.

The average volume for American Capital Agency has been 9,871,600 shares per day over the past 30 days. American Capital Agency has a market cap of $9.0 billion and is part of the real estate industry. Shares are down 21.6% year to date as of the close of trading on Monday.

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

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 Real Estate Investment Trusts (REITs) industry. The net income increased by 800.8% when compared to the same quarter one year prior, rising from -$261.00 million to $1,829.00 million.
  • 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, AMERICAN CAPITAL AGENCY CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • AMERICAN CAPITAL AGENCY 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, AMERICAN CAPITAL AGENCY CORP reported lower earnings of $4.40 versus $5.22 in the prior year. This year, the market expects an improvement in earnings ($6.98 versus $4.40).
  • AGNC's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 36.48%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • Net operating cash flow has decreased to $494.00 million or 19.54% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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

Potash Corporation of Saskatchewan

Dividend Yield: 4.70%

Potash Corporation of Saskatchewan (NYSE: POT) shares currently have a dividend yield of 4.70%.

Potash Corporation of Saskatchewan Inc., together with its subsidiaries, produces and sells fertilizers and related industrial and feed products primarily in the United States and Canada. The company mines and produces potash, which is used as fertilizer. The company has a P/E ratio of 11.57.

The average volume for Potash Corporation of Saskatchewan has been 11,564,500 shares per day over the past 30 days. Potash Corporation of Saskatchewan has a market cap of $25.9 billion and is part of the chemicals industry. Shares are down 24.9% year to date as of the close of trading on Monday.

TheStreet Ratings rates Potash Corporation of Saskatchewan as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins 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 exceeded that of the S&P 500 and the Chemicals industry average. The net income increased by 23.2% when compared to the same quarter one year prior, going from $522.00 million to $643.00 million.
  • The gross profit margin for POTASH CORP SASK INC is rather high; currently it is at 50.56%. Regardless of POT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, POT's net profit margin of 29.99% significantly outperformed against the industry.
  • The current debt-to-equity ratio, 0.34, 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 0.98 is somewhat weak and could be cause for future problems.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Chemicals industry and the overall market on the basis of return on equity, POTASH CORP SASK INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Net operating cash flow has declined marginally to $1,202.00 million or 1.63% when compared to the same quarter last year. Despite a decrease in cash flow of 1.63%, POTASH CORP SASK INC is in line with the industry average cash flow growth rate of -7.63%.

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: 5.90%

R.R. Donnelley & Sons Company (NASDAQ: RRD) shares currently have a dividend yield of 5.90%.

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 2,188,300 shares per day over the past 30 days. R.R. Donnelley & Sons Company has a market cap of $3.2 billion and is part of the diversified services industry. Shares are up 94.4% year to date as of the close of trading on Monday.

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 7.4%. 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 48.09%, 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.

Canadian Imperial Bank of Commerce

Dividend Yield: 4.80%

Canadian Imperial Bank of Commerce (NYSE: CM) shares currently have a dividend yield of 4.80%.

Canadian Imperial Bank of Commerce provides various financial products and services in Canada and internationally. It operates through three segments: Retail and Business Banking, Wealth Management, and Wholesale Banking. The company has a P/E ratio of 9.53.

The average volume for Canadian Imperial Bank of Commerce has been 234,300 shares per day over the past 30 days. Canadian Imperial Bank of Commerce has a market cap of $30.4 billion and is part of the banking industry. Shares are down 5.6% year to date as of the close of trading on Monday.

TheStreet Ratings rates Canadian Imperial Bank of Commerce as a hold. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • CANADIAN IMPERIAL BANK has improved earnings per share by 11.6% 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. During the past fiscal year, CANADIAN IMPERIAL BANK increased its bottom line by earning $7.85 versus $7.30 in the prior year.
  • The gross profit margin for CANADIAN IMPERIAL BANK is currently very high, coming in at 72.95%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.90% is above that of the industry average.
  • Net operating cash flow has significantly increased by 108.27% to $235.00 million when compared to the same quarter last year. Despite an increase in cash flow, CANADIAN IMPERIAL BANK's average is still marginally south of the industry average growth rate of 112.08%.
  • 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 Commercial Banks industry and the overall market, CANADIAN IMPERIAL BANK's return on equity exceeds that of both the industry average and the S&P 500.
  • In its most recent trading session, CM 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.

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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