Hold-Rated Dividend Stocks In The Top 5: HME, TE, BMO, CM, PM

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."

Home Properties

Dividend Yield: 4.80%

Home Properties (NYSE: HME) shares currently have a dividend yield of 4.80%.

Home Properties, Inc. is an independent real estate investment trust. The firm invests in the real estate markets of the United States. It is engaged in the ownership, management, acquisition, rehabilitation and development of residential apartment communities. The company has a P/E ratio of 36.73.

The average volume for Home Properties has been 510,900 shares per day over the past 30 days. Home Properties has a market cap of $3.3 billion and is part of the real estate industry. Shares are down 4.2% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Home Properties as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • HOME PROPERTIES 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, HOME PROPERTIES INC increased its bottom line by earning $1.27 versus $0.81 in the prior year. This year, the market expects an improvement in earnings ($1.58 versus $1.27).
  • 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 97.0% when compared to the same quarter one year prior, rising from $13.73 million to $27.04 million.
  • Net operating cash flow has slightly increased to $74.98 million or 4.53% when compared to the same quarter last year. Despite an increase in cash flow, HOME PROPERTIES INC's average is still marginally south of the industry average growth rate of 5.47%.
  • In its most recent trading session, HME has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • The gross profit margin for HOME PROPERTIES INC is currently lower than what is desirable, coming in at 34.07%. Regardless of HME's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, HME's net profit margin of 16.17% is significantly lower than the industry average.

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TECO Energy

Dividend Yield: 5.20%

TECO Energy (NYSE: TE) shares currently have a dividend yield of 5.20%.

TECO Energy, Inc., an electric and gas utility holding company, engages in the regulated electric and gas utility operations. The company has a P/E ratio of 15.92.

The average volume for TECO Energy has been 2,105,400 shares per day over the past 30 days. TECO Energy has a market cap of $3.7 billion and is part of the utilities industry. Shares are up 1.6% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates TECO Energy as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels 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 poor profit margins.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 59.38% to $129.90 million when compared to the same quarter last year. In addition, TECO ENERGY INC has also vastly surpassed the industry average cash flow growth rate of 4.87%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 2.9%. Since the same quarter one year prior, revenues slightly dropped by 2.2%. The declining revenue appears to have seeped down to the company's 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 against the S&P 500 and did not exceed that of the Multi-Utilities industry. The net income has significantly decreased by 29.7% when compared to the same quarter one year ago, falling from $73.10 million to $51.40 million.
  • The gross profit margin for TECO ENERGY INC is currently lower than what is desirable, coming in at 27.64%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.98% 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.

Bank of Montreal

Dividend Yield: 4.30%

Bank of Montreal (NYSE: BMO) shares currently have a dividend yield of 4.30%.

Bank of Montreal, together with its subsidiaries, provides various retail banking, wealth management, and investment banking products and services in North America and internationally. The company has a P/E ratio of 10.96.

The average volume for Bank of Montreal has been 425,100 shares per day over the past 30 days. Bank of Montreal has a market cap of $42.7 billion and is part of the banking industry. Shares are up 8.1% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Bank of Montreal as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and growth in earnings per share. 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:
  • BMO's revenue growth has slightly outpaced the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 1.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 Commercial Banks industry and the overall market, BANK OF MONTREAL's return on equity exceeds that of both the industry average and the S&P 500.
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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.
  • Net operating cash flow has decreased to $2,964.00 million or 17.43% 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.

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Canadian Imperial Bank of Commerce

Dividend Yield: 4.60%

Canadian Imperial Bank of Commerce (NYSE: CM) shares currently have a dividend yield of 4.60%.

Canadian Imperial Bank of Commerce provides various financial products and services in Canada and internationally. It operates through three segments: Retail and Business Banking, Wealth Management, and Wholesale Banking. The company has a P/E ratio of 9.97.

The average volume for Canadian Imperial Bank of Commerce has been 208,300 shares per day over the past 30 days. Canadian Imperial Bank of Commerce has a market cap of $32.5 billion and is part of the banking industry. Shares are up 0.8% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Canadian Imperial Bank of Commerce as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and expanding profit margins. However, as a counter to these strengths, we find that the stock has experienced relatively poor performance when compared with the S&P 500 during the past year.

Highlights from the ratings report include:
  • CM's revenue growth has slightly outpaced the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 1.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 Commercial Banks industry and the overall market, CANADIAN IMPERIAL BANK's return on equity exceeds that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has exceeded that of the Commercial Banks industry average, but is less than that of the S&P 500. The net income increased by 6.1% when compared to the same quarter one year prior, going from $839.00 million to $890.00 million.
  • In its most recent trading session, CM has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.

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

Philip Morris International

Dividend Yield: 4.30%

Philip Morris International (NYSE: PM) shares currently have a dividend yield of 4.30%.

Philip Morris International Inc., through its subsidiaries, manufactures and sells cigarettes and other tobacco products. The company has a P/E ratio of 16.97.

The average volume for Philip Morris International has been 4,846,000 shares per day over the past 30 days. Philip Morris International has a market cap of $141.5 billion and is part of the tobacco industry. Shares are up 4.5% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Philip Morris International as a hold. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:
  • PHILIP MORRIS INTERNATIONAL' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, PHILIP MORRIS INTERNATIONAL increased its bottom line by earning $5.18 versus $4.84 in the prior year. This year, the market expects an improvement in earnings ($5.44 versus $5.18).
  • The gross profit margin for PHILIP MORRIS INTERNATIONAL is rather high; currently it is at 68.35%. Regardless of PM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PM's net profit margin of 26.82% compares favorably to the industry average.
  • PM, with its decline in revenue, slightly underperformed the industry average of 2.1%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 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 the Tobacco industry average. The net income has decreased by 8.3% when compared to the same quarter one year ago, dropping from $2,317.00 million to $2,124.00 million.
  • Net operating cash flow has declined marginally to $3,137.00 million or 9.85% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, PHILIP MORRIS INTERNATIONAL has marginally lower results.

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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