4 Hold-Rated Dividend Stocks Taking The Lead: SPH, NRGM, DSWL, PDH

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."

Suburban Propane Partners

Dividend Yield: 7.70%

Suburban Propane Partners (NYSE: SPH) shares currently have a dividend yield of 7.70%.

Suburban Propane Partners, L.P., through its subsidiaries, engages in the retail marketing and distribution of propane, fuel oil, and refined fuels. The company has a P/E ratio of 62.34.

The average volume for Suburban Propane Partners has been 183,800 shares per day over the past 30 days. Suburban Propane Partners has a market cap of $2.7 billion and is part of the utilities industry. Shares are up 17.1% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Suburban Propane Partners 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 largely solid financial position with reasonable debt levels by most measures. 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:
  • SPH's very impressive revenue growth greatly exceeded the industry average of 21.0%. Since the same quarter one year prior, revenues leaped by 61.9%. 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 $66.51 million or 18.33% when compared to the same quarter last year. In addition, SUBURBAN PROPANE PRTNRS -LP has also modestly surpassed the industry average cash flow growth rate of 13.00%.
  • Even though the current debt-to-equity ratio is 1.14, it is still below the industry average, suggesting that this level of debt is acceptable within the Gas Utilities industry. Despite the fact that SPH's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.15 is high and demonstrates strong liquidity.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Gas Utilities industry and the overall market, SUBURBAN PROPANE PRTNRS -LP's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for SUBURBAN PROPANE PRTNRS -LP is currently extremely low, coming in at 8.36%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -15.53% is significantly below 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.

Inergy Midstream

Dividend Yield: 7.30%

Inergy Midstream (NYSE: NRGM) shares currently have a dividend yield of 7.30%.

Inergy Midstream, L.P. engages in acquiring, owning, developing, and operating midstream energy assets. The company primarily involves in the storage and transportation of natural gas and natural gas liquids in northeast region of the United States. The company has a P/E ratio of 109.05.

The average volume for Inergy Midstream has been 399,600 shares per day over the past 30 days. Inergy Midstream has a market cap of $1.9 billion and is part of the energy industry. Shares are down 2% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Inergy Midstream as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth and expanding profit margins. 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 revenue growth greatly exceeded the industry average of 6.5%. Since the same quarter one year prior, revenues rose by 45.1%. 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.
  • The gross profit margin for INERGY MIDSTREAM -LP is rather high; currently it is at 51.77%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.41% trails the industry average.
  • The debt-to-equity ratio of 1.04 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, NRGM's quick ratio is somewhat strong at 1.44, demonstrating the ability to handle short-term liquidity needs.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, INERGY MIDSTREAM -LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has decreased to $29.50 million or 42.38% 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.

Deswell Industries

Dividend Yield: 8.10%

Deswell Industries (NASDAQ: DSWL) shares currently have a dividend yield of 8.10%.

Deswell Industries, Inc. engages in the manufacture and sale of injection-molded plastic parts and components, electronic products and subassemblies, and metallic molds and accessory parts for original equipment manufacturers and contract manufacturers.

The average volume for Deswell Industries has been 11,800 shares per day over the past 30 days. Deswell Industries has a market cap of $39.8 million and is part of the consumer non-durables industry. Shares are up 2.5% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Deswell Industries as a hold. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, 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:
  • DSWL 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. Along with this, the company maintains a quick ratio of 4.13, which clearly demonstrates the ability to cover short-term cash needs.
  • DSWL, with its decline in revenue, underperformed when compared the industry average of 2.8%. Since the same quarter one year prior, revenues fell by 23.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing 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 Chemicals industry and the overall market, DESWELL INDUSTRIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for DESWELL INDUSTRIES INC is currently extremely low, coming in at 6.95%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -15.46% is significantly below 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.

PetroLogistics

Dividend Yield: 10.20%

PetroLogistics (NYSE: PDH) shares currently have a dividend yield of 10.20%.

PetroLogistics LP owns and operates propane dehydrogenation facility that processes propane into propylene in North America. It sells propylene, hydrogen, and C4 mix/C5+ streams to Petrochemical and Chemical companies. PetroLogistics LP has partnership with PetroLogistics GP LLC. The company has a P/E ratio of 13.26.

The average volume for PetroLogistics has been 223,600 shares per day over the past 30 days. PetroLogistics has a market cap of $1.6 billion and is part of the chemicals industry. Shares are down 11% year to date as of the close of trading on Thursday.

TheStreet Ratings rates PetroLogistics 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and generally higher debt management risk.

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 Chemicals industry. The net income increased by 209.5% when compared to the same quarter one year prior, rising from -$37.81 million to $41.41 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 Chemicals industry and the overall market, PETROLOGISTICS LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • PETROLOGISTICS 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, PETROLOGISTICS LP reported poor results of -$0.41 versus -$0.02 in the prior year. This year, the market expects an improvement in earnings ($1.42 versus -$0.41).
  • The debt-to-equity ratio of 1.02 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, PDH has managed to keep a strong quick ratio of 2.29, which demonstrates the ability to cover short-term cash needs.
  • PDH has underperformed the S&P 500 Index, declining 9.45% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

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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