4 Hold-Rated Dividend Stocks: CMO, HGT, XTEX, CODI

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."

Capstead Mortgage Corporation

Dividend Yield: 10.60%

Capstead Mortgage Corporation (NYSE: CMO) shares currently have a dividend yield of 10.60%.

Capstead Mortgage Corporation operates as a real estate investment trust in the United States. The company has a P/E ratio of 11.73.

The average volume for Capstead Mortgage Corporation has been 938,700 shares per day over the past 30 days. Capstead Mortgage Corporation has a market cap of $1.1 billion and is part of the real estate industry. Shares are up 2.7% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Capstead Mortgage Corporation as a hold. The company's strengths can be seen in multiple areas, such as its reasonable 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, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The gross profit margin for CAPSTEAD MORTGAGE CORP is currently very high, coming in at 94.62%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 57.92% significantly outperformed against the industry average.
  • The revenue fell significantly faster than the industry average of 10.7%. Since the same quarter one year prior, revenues fell by 21.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 31.0% when compared to the same quarter one year ago, falling from $43.34 million to $29.89 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CAPSTEAD MORTGAGE CORP's return on equity is below 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.

Hugoton Royalty

Dividend Yield: 12.50%

Hugoton Royalty (NYSE: HGT) shares currently have a dividend yield of 12.50%.

Hugoton Royalty Trust operates as an express trust in the United States. The company holds an 80% net profits interests in certain natural gas producing working interest properties of XTO Energy Inc. XTO Energy Inc. The company has a P/E ratio of 14.98.

The average volume for Hugoton Royalty has been 121,600 shares per day over the past 30 days. Hugoton Royalty has a market cap of $317.6 million and is part of the energy industry. Shares are up 6.6% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Hugoton Royalty as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. 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:
  • The revenue growth greatly exceeded the industry average of 6.6%. Since the same quarter one year prior, revenues rose by 35.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HGT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
  • The gross profit margin for HUGOTON ROYALTY TRUST is currently very high, coming in at 100.00%. HGT has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, HGT's net profit margin of 97.34% significantly outperformed against the industry.
  • HUGOTON ROYALTY TRUST has improved earnings per share by 43.8% 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, HUGOTON ROYALTY TRUST reported lower earnings of $0.58 versus $1.40 in the prior year.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, HUGOTON ROYALTY TRUST has underperformed in comparison with the industry average, but has exceeded that of 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.

Crosstex Energy

Dividend Yield: 7.10%

Crosstex Energy (NASDAQ: XTEX) shares currently have a dividend yield of 7.10%.

Crosstex Energy, L.P. operates as an independent midstream energy company.

The average volume for Crosstex Energy has been 472,100 shares per day over the past 30 days. Crosstex Energy has a market cap of $1.7 billion and is part of the energy industry. Shares are up 28.7% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Crosstex Energy 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:
  • The revenue growth came in higher than the industry average of 6.6%. Since the same quarter one year prior, revenues rose by 15.3%. 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 increased to $52.46 million or 28.23% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -15.97%.
  • 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, despite the company's weak earnings results. 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.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, CROSSTEX ENERGY LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CROSSTEX ENERGY LP is currently extremely low, coming in at 12.92%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.33% trails that of 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.

Compass Diversified Holdings Shares of Bene

Dividend Yield: 8.20%

Compass Diversified Holdings Shares of Bene (NYSE: CODI) shares currently have a dividend yield of 8.20%.

Compass Diversified Holdings is a public investment firm specializing in acquiring controlling stakes in small to middle market companies. The firm seeks to make middle market and buyout investments.

The average volume for Compass Diversified Holdings Shares of Bene has been 140,900 shares per day over the past 30 days. Compass Diversified Holdings Shares of Bene has a market cap of $845.7 million and is part of the diversified services industry. Shares are up 19.6% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Compass Diversified Holdings Shares of Bene as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and poor profit margins.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.2%. Since the same quarter one year prior, revenues slightly increased by 6.8%. 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.
  • The debt-to-equity ratio is somewhat low, currently at 0.77, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.08, which illustrates the ability to avoid short-term cash problems.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
  • The gross profit margin for COMPASS DIVERSIFIED HOLDINGS is currently lower than what is desirable, coming in at 33.13%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.23% is significantly below 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 when compared to that of the S&P 500 and the Diversified Financial Services industry. The net income has significantly decreased by 848.7% when compared to the same quarter one year ago, falling from $0.08 million to -$0.57 million.

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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