What To Hold: Top 5 Hold-Rated Dividend Stocks: PBI, ISIL, RWT, EEP, HCN

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."

Pitney Bowes

Dividend Yield: 4.40%

Pitney Bowes (NYSE: PBI) shares currently have a dividend yield of 4.40%.

Pitney Bowes Inc. provides software, hardware, and services to enable physical and digital communications in the United States and internationally. The company has a P/E ratio of 12.64.

The average volume for Pitney Bowes has been 4,968,500 shares per day over the past 30 days. Pitney Bowes has a market cap of $3.5 billion and is part of the consumer durables industry. Shares are up 58.3% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Pitney Bowes as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and generally higher debt management risk.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, PBI's share price has jumped by 27.05%, 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 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 Commercial Services & Supplies industry and the overall market, PITNEY BOWES INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for PITNEY BOWES INC is rather high; currently it is at 57.22%. Regardless of PBI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -0.79% trails the industry average.
  • 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 Commercial Services & Supplies industry. The net income has significantly decreased by 109.3% when compared to the same quarter one year ago, falling from $99.62 million to -$9.23 million.
  • Net operating cash flow has decreased to $146.88 million or 46.42% 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.

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 1,264,700 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 30.8% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Intersil Corporation as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, 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 13.6%. 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.

Redwood

Dividend Yield: 6.40%

Redwood (NYSE: RWT) shares currently have a dividend yield of 6.40%.

Redwood Trust, Inc. engages in investing, financing, and managing real estate-related assets. The company has a P/E ratio of 7.32.

The average volume for Redwood has been 1,114,500 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 up 3.8% year to date as of the close of trading on Tuesday.

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:
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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.
  • 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 ($1.83 versus $1.59).
  • The gross profit margin for REDWOOD TRUST INC is rather high; currently it is at 64.70%. 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 113.60% significantly outperformed against the industry.
  • RWT, with its decline in revenue, underperformed when compared the industry average of 10.8%. Since the same quarter one year prior, revenues slightly dropped by 3.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Net operating cash flow has significantly decreased to -$455.13 million or 3330.18% 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.

Enbridge Energy Partners

Dividend Yield: 7.20%

Enbridge Energy Partners (NYSE: EEP) shares currently have a dividend yield of 7.20%.

Enbridge Energy Partners, L.P. owns and operates crude oil and liquid petroleum transportation and storage assets; and natural gas gathering, treating, processing, transportation, and marketing assets in the United States. The company has a P/E ratio of 23.27.

The average volume for Enbridge Energy Partners has been 821,700 shares per day over the past 30 days. Enbridge Energy Partners has a market cap of $7.6 billion and is part of the energy industry. Shares are up 7.3% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Enbridge Energy Partners as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth 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, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 10.3%. Since the same quarter one year prior, revenues slightly increased by 7.8%. 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 174.34% to $271.60 million when compared to the same quarter last year. In addition, ENBRIDGE ENERGY PRTNRS -LP has also vastly surpassed the industry average cash flow growth rate of -17.92%.
  • The gross profit margin for ENBRIDGE ENERGY PRTNRS -LP is currently lower than what is desirable, coming in at 31.57%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.29% trails that of the industry average.
  • ENBRIDGE ENERGY PRTNRS -LP's earnings per share declined by 45.5% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, ENBRIDGE ENERGY PRTNRS -LP reported lower earnings of $1.25 versus $1.89 in the prior year. For the next year, the market is expecting a contraction of 32.4% in earnings ($0.85 versus $1.25).

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: 5.00%

Health Care REIT (NYSE: HCN) shares currently have a dividend yield of 5.00%.

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 79.31.

The average volume for Health Care REIT has been 2,076,100 shares per day over the past 30 days. Health Care REIT has a market cap of $17.5 billion and is part of the real estate industry. Shares are up 0.3% year to date as of the close of trading on Tuesday.

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 growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • HCN's very impressive revenue growth greatly exceeded the industry average of 10.8%. Since the same quarter one year prior, revenues leaped by 53.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HEALTH CARE REIT 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, HEALTH CARE REIT INC increased its bottom line by earning $0.42 versus $0.34 in the prior year. This year, the market expects an improvement in earnings ($0.75 versus $0.42).
  • 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 21.57%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.19% 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.

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