What To Hold: Top 5 Hold-Rated Dividend Stocks: NLY, AGNC, AEC, RPAI, HTA

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."

Annaly Capital Management

Dividend Yield: 13.60%

Annaly Capital Management (NYSE: NLY) shares currently have a dividend yield of 13.60%.

Annaly Mortgage Management, Inc. is a self-advised, self-managed real estate investment trust. The company has a P/E ratio of 3.42.

The average volume for Annaly Capital Management has been 12,740,000 shares per day over the past 30 days. Annaly Capital Management has a market cap of $11.2 billion and is part of the real estate industry. Shares are down 16.1% year to date as of the close of trading on Monday.

TheStreet Ratings rates Annaly Capital Management 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 1897.1% when compared to the same quarter one year prior, rising from -$91.16 million to $1,638.21 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, ANNALY CAPITAL MANAGEMENT's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • ANNALY CAPITAL MANAGEMENT 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ANNALY CAPITAL MANAGEMENT increased its bottom line by earning $1.69 versus $0.49 in the prior year. This year, the market expects earnings to be in line with last year ($1.69 versus $1.69).
  • NLY'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 34.52%, 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 significantly decreased to -$3,820.86 million or 192.63% 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.

American Capital Agency

Dividend Yield: 18.50%

American Capital Agency (NASDAQ: AGNC) shares currently have a dividend yield of 18.50%.

American Capital Agency Corp. operates as a real estate investment trust (REIT). The company has a P/E ratio of 2.76.

The average volume for American Capital Agency has been 8,626,700 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 19.9% 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 36.02%, 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.

Associated Estates Realty

Dividend Yield: 5.40%

Associated Estates Realty (NYSE: AEC) shares currently have a dividend yield of 5.40%.

Associated Estates Realty Corporation is an independent real estate investment trust. The firm invests in the real estate markets of the United States. It specializes in owning and managing apartment communities in the Midwest, Mid-Atlantic and Southeast regions of the United States. The company has a P/E ratio of 82.35.

The average volume for Associated Estates Realty has been 833,600 shares per day over the past 30 days. Associated Estates Realty has a market cap of $706.4 million and is part of the real estate industry. Shares are down 13.2% year to date as of the close of trading on Monday.

TheStreet Ratings rates Associated Estates Realty as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • AEC's revenue growth has slightly outpaced the industry average of 10.8%. Since the same quarter one year prior, revenues rose by 14.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ASSOCIATED ESTATES RLTY CORP has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. 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, ASSOCIATED ESTATES RLTY CORP turned its bottom line around by earning $0.02 versus -$0.27 in the prior year. This year, the market expects an improvement in earnings ($0.38 versus $0.02).
  • The gross profit margin for ASSOCIATED ESTATES RLTY CORP is rather low; currently it is at 19.81%. Regardless of AEC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, AEC's net profit margin of 3.58% is significantly lower than 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 93.1% when compared to the same quarter one year ago, falling from $23.67 million to $1.64 million.

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

Retail Properties of American Inc Class A

Dividend Yield: 4.80%

Retail Properties of American Inc Class A (NYSE: RPAI) shares currently have a dividend yield of 4.80%.

Inland Western Retail Real Estate Trust, Inc. is a real estate investment trust. It engages in acquisition, development and management of properties. The trust invests in the real estate markets of United States. The company has a P/E ratio of 693.00.

The average volume for Retail Properties of American Inc Class A has been 812,400 shares per day over the past 30 days. Retail Properties of American Inc Class A has a market cap of $2.6 billion and is part of the real estate industry. Shares are up 15.8% year to date as of the close of trading on Monday.

TheStreet Ratings rates Retail Properties of American Inc Class A as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in 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 10.8%. 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.
  • Net operating cash flow has increased to $71.10 million or 15.50% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 5.35%.
  • Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, RETAIL PPTYS OF AMERICA INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income has decreased by 9.6% when compared to the same quarter one year ago, dropping from $17.68 million to $15.97 million.
  • The gross profit margin for RETAIL PPTYS OF AMERICA INC is currently extremely low, coming in at 12.72%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 11.40% 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.

Healthcare Trust of America

Dividend Yield: 5.50%

Healthcare Trust of America (NYSE: HTA) shares currently have a dividend yield of 5.50%.

No company description available. The company has a P/E ratio of 208.80.

The average volume for Healthcare Trust of America has been 1,618,400 shares per day over the past 30 days. Healthcare Trust of America has a market cap of $1.8 billion and is part of the real estate industry. Shares are up 5.5% year to date as of the close of trading on Monday.

TheStreet Ratings rates Healthcare Trust of America as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and good cash flow from operations. 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 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 172.6% when compared to the same quarter one year prior, rising from -$19.32 million to $14.03 million.
  • 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 2.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • HEALTHCARE TRUST OF AMERICA 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, HEALTHCARE TRUST OF AMERICA reported poor results of -$0.10 versus $0.00 in the prior year. This year, the market expects an improvement in earnings ($0.13 versus -$0.10).
  • 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 on the basis of return on equity, HEALTHCARE TRUST OF AMERICA underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for HEALTHCARE TRUST OF AMERICA is rather low; currently it is at 23.61%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, HTA's net profit margin of 18.15% 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.

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