Hold-Rated Dividend Stocks In The Top 5: RWT, DCT, NS, HTS, OFC

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."

Redwood

Dividend Yield: 6.10%

Redwood (NYSE: RWT) shares currently have a dividend yield of 6.10%.

Redwood Trust, Inc. engages in investing, financing, and managing real estate-related assets. The company has a P/E ratio of 7.72.

The average volume for Redwood has been 1,082,800 shares per day over the past 30 days. Redwood has a market cap of $1.5 billion and is part of the real estate industry. Shares are up 10.1% year to date as of the close of trading on Friday.

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:
  • Powered by its strong earnings growth of 195.83% and other important driving factors, this stock has surged by 25.28% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
  • 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.

DCT Industrial

Dividend Yield: 4.10%

DCT Industrial (NYSE: DCT) shares currently have a dividend yield of 4.10%.

DCT Industrial Trust Inc. operates as a publicly owned real estate investment trust. The firm provides its services to companies. Through its fund, it engages in the ownership, operation, and development of real estate properties.

The average volume for DCT Industrial has been 4,825,300 shares per day over the past 30 days. DCT Industrial has a market cap of $2.1 billion and is part of the real estate industry. Shares are up 6% year to date as of the close of trading on Friday.

TheStreet Ratings rates DCT Industrial as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 10.8%. Since the same quarter one year prior, revenues rose by 20.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • DCT INDUSTRIAL 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, DCT INDUSTRIAL TRUST INC continued to lose money by earning -$0.09 versus -$0.13 in the prior year. This year, the market expects an improvement in earnings ($0.00 versus -$0.09).
  • 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, DCT INDUSTRIAL TRUST INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for DCT INDUSTRIAL TRUST INC is rather low; currently it is at 16.12%. Regardless of DCT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, DCT's net profit margin of 14.56% is significantly lower than 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.

NuStar Energy L.P

Dividend Yield: 10.70%

NuStar Energy L.P (NYSE: NS) shares currently have a dividend yield of 10.70%.

NuStar Energy L.P. engages in the terminalling, storage, and transportation of petroleum products primarily in the United States and the Netherlands. The company operates in three segments: Storage, Transportation, and Asphalt and Fuels Marketing. The company has a P/E ratio of 78.54.

The average volume for NuStar Energy L.P has been 308,400 shares per day over the past 30 days. NuStar Energy L.P has a market cap of $3.2 billion and is part of the energy industry. Shares are down 3.2% year to date as of the close of trading on Friday.

TheStreet Ratings rates NuStar Energy L.P as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, good cash flow from operations and impressive record of earnings per share growth. 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 poor profit margins.

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 Oil, Gas & Consumable Fuels industry. The net income increased by 113.4% when compared to the same quarter one year prior, rising from -$246.74 million to $33.09 million.
  • Net operating cash flow has significantly increased by 108.84% to $87.16 million when compared to the same quarter last year. In addition, NUSTAR ENERGY LP has also vastly surpassed the industry average cash flow growth rate of -15.85%.
  • NUSTAR ENERGY LP 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, NUSTAR ENERGY LP swung to a loss, reporting -$2.95 versus $2.79 in the prior year. This year, the market expects an improvement in earnings ($1.11 versus -$2.95).
  • The debt-to-equity ratio of 1.03 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, NS maintains a poor quick ratio of 0.90, which illustrates the inability to avoid short-term cash problems.
  • NS has underperformed the S&P 500 Index, declining 16.08% from its price level of one year ago. 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.

Hatteras Financial Corporation

Dividend Yield: 15.30%

Hatteras Financial Corporation (NYSE: HTS) shares currently have a dividend yield of 15.30%.

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 5.79.

The average volume for Hatteras Financial Corporation has been 1,247,000 shares per day over the past 30 days. Hatteras Financial Corporation has a market cap of $1.8 billion and is part of the real estate industry. Shares are down 26.6% 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 5.35%.
  • 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.

Corporate Office Properties

Dividend Yield: 4.90%

Corporate Office Properties (NYSE: OFC) shares currently have a dividend yield of 4.90%.

RF Rev 0/$225 Construction Rev $50/$700 Unsecured.

The average volume for Corporate Office Properties has been 598,200 shares per day over the past 30 days. Corporate Office Properties has a market cap of $2.0 billion and is part of the real estate industry. Shares are down 7.5% year to date as of the close of trading on Friday.

TheStreet Ratings rates Corporate Office Properties as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • OFC's revenue growth has slightly outpaced the industry average of 10.8%. Since the same quarter one year prior, revenues rose by 11.2%. 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.
  • CORP OFFICE PPTYS TR 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CORP OFFICE PPTYS TR INC continued to lose money by earning -$0.18 versus -$1.32 in the prior year. This year, the market expects an improvement in earnings ($0.45 versus -$0.18).
  • 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CORP OFFICE PPTYS TR INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $14.22 million or 79.12% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 147.4% when compared to the same quarter one year ago, falling from $11.31 million to -$5.37 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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