Best 3 Yielding Hold-Rated Stocks: APTS, ABR, HRZN

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

Preferred Apartment Communities

Dividend Yield: 7.10%

Preferred Apartment Communities (AMEX: APTS) shares currently have a dividend yield of 7.10%.

Preferred Apartment Communities, Inc. is a real estate investment trust launched and managed by Preferred Apartment Advisors, LLC. The fund invests in real estate markets of the United States. It primarily acquires and operates multifamily apartment properties.

The average volume for Preferred Apartment Communities has been 30,900 shares per day over the past 30 days. Preferred Apartment Communities has a market cap of $92.7 million and is part of the real estate industry. Shares are up 7.8% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Preferred Apartment Communities 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • APTS's very impressive revenue growth greatly exceeded the industry average of 10.8%. Since the same quarter one year prior, revenues leaped by 168.1%. 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 185.51% to $2.48 million when compared to the same quarter last year. In addition, PREFERRED APARTMENT CMNTYS has also vastly surpassed the industry average cash flow growth rate of 5.77%.
  • The gross profit margin for PREFERRED APARTMENT CMNTYS is rather high; currently it is at 55.86%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -33.72% is in-line with 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 1005.1% when compared to the same quarter one year ago, falling from -$0.23 million to -$2.59 million.
  • 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, PREFERRED APARTMENT CMNTYS'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.

Arbor Realty

Dividend Yield: 7.40%

Arbor Realty (NYSE: ABR) shares currently have a dividend yield of 7.40%.

Arbor Realty Trust, Inc. operates as a real estate investment trust (REIT) in the United States. The company has a P/E ratio of 28.08.

The average volume for Arbor Realty has been 171,900 shares per day over the past 30 days. Arbor Realty has a market cap of $302.8 million and is part of the real estate industry. Shares are up 14.7% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Arbor Realty as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • ABR's revenue growth has slightly outpaced the industry average of 10.8%. Since the same quarter one year prior, revenues rose by 19.2%. 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.
  • Compared to its closing price of one year ago, ABR's share price has jumped by 25.58%, 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.
  • 43.94% is the gross profit margin for ARBOR REALTY TRUST INC which we consider to be strong. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, ABR's net profit margin of 12.54% significantly trails the industry average.
  • ARBOR 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 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, ARBOR REALTY TRUST INC turned its bottom line around by earning $0.64 versus -$1.53 in the prior year. For the next year, the market is expecting a contraction of 37.5% in earnings ($0.40 versus $0.64).
  • 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 significantly decreased by 73.3% when compared to the same quarter one year ago, falling from $15.55 million to $4.15 million.

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

Horizon Technology Finance Corp BDC

Dividend Yield: 10.10%

Horizon Technology Finance Corp BDC (NASDAQ: HRZN) shares currently have a dividend yield of 10.10%.

Horizon Technology Finance Corporation, a specialty finance company, lends to and invests in development-stage companies in the United States. The company has a P/E ratio of 10.18.

The average volume for Horizon Technology Finance Corp BDC has been 61,000 shares per day over the past 30 days. Horizon Technology Finance Corp BDC has a market cap of $130.7 million and is part of the financial services industry. Shares are down 8.6% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Horizon Technology Finance Corp BDC 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • HRZN's very impressive revenue growth greatly exceeded the industry average of 12.4%. Since the same quarter one year prior, revenues leaped by 60.3%. 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.
  • Net operating cash flow has significantly increased by 134.28% to $3.77 million when compared to the same quarter last year. In addition, HORIZON TECHNOLOGY FINANCE has also vastly surpassed the industry average cash flow growth rate of 7.92%.
  • The gross profit margin for HORIZON TECHNOLOGY FINANCE is rather high; currently it is at 62.88%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 13.06% trails the industry average.
  • 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 Capital Markets industry and the overall market on the basis of return on equity, HORIZON TECHNOLOGY FINANCE underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The share price of HORIZON TECHNOLOGY FINANCE has not done very well: it is down 16.93% 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. 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.

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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