What To Hold: Top 5 Hold-Rated Dividend Stocks: CWH, LINE, VNR, VALE, BBEP

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."

CommonWealth REIT

Dividend Yield: 4.40%

CommonWealth REIT (NYSE: CWH) shares currently have a dividend yield of 4.40%.

CommonWealth REIT is a real estate investment trust launched and managed by Reit Management & Research LLC. The fund invests in the real estate markets of the United States. It seeks to invest in office buildings, industrial buildings, and leased industrial land. The company has a P/E ratio of 54.98.

The average volume for CommonWealth REIT has been 839,900 shares per day over the past 30 days. CommonWealth REIT has a market cap of $2.7 billion and is part of the real estate industry. Shares are up 42.3% year to date as of the close of trading on Thursday.

TheStreet Ratings rates CommonWealth REIT as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 50.00% and other important driving factors, this stock has surged by 55.44% 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.
  • 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 8.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • COMMONWEALTH REIT 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. During the past fiscal year, COMMONWEALTH REIT increased its bottom line by earning $0.34 versus $0.19 in the prior year.
  • The gross profit margin for COMMONWEALTH REIT is currently lower than what is desirable, coming in at 33.58%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.86% significantly trails the industry average.
  • Net operating cash flow has declined marginally to $93.87 million or 9.35% 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.

Linn Energy

Dividend Yield: 11.70%

Linn Energy (NASDAQ: LINE) shares currently have a dividend yield of 11.70%.

Linn Energy, LLC, an independent oil and natural gas company, engages in the acquisition and development of oil and natural gas properties.

The average volume for Linn Energy has been 3,878,600 shares per day over the past 30 days. Linn Energy has a market cap of $6.2 billion and is part of the energy industry. Shares are down 25.2% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Linn Energy as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.4%. Since the same quarter one year prior, revenues slightly increased by 6.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for LINN ENERGY LLC is currently very high, coming in at 83.23%. It has increased significantly from the same period last year. Along with this, the net profit margin of 41.39% significantly outperformed against the industry average.
  • LINN ENERGY LLC has improved earnings per share by 22.7% 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, LINN ENERGY LLC swung to a loss, reporting -$1.86 versus $2.21 in the prior year. This year, the market expects an improvement in earnings ($0.88 versus -$1.86).
  • The debt-to-equity ratio of 1.48 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.44, which clearly demonstrates the inability to cover short-term cash needs.
  • 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, LINN ENERGY LLC's return on equity significantly trails 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.

Vanguard Natural Resources

Dividend Yield: 8.90%

Vanguard Natural Resources (NASDAQ: VNR) shares currently have a dividend yield of 8.90%.

Vanguard Natural Resources, LLC, through its subsidiaries, engages in the acquisition and development of oil and natural gas properties in the United States.

The average volume for Vanguard Natural Resources has been 448,800 shares per day over the past 30 days. Vanguard Natural Resources has a market cap of $2.2 billion and is part of the energy industry. Shares are up 7.9% year to date as of the close of trading on Thursday.

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

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.4%. Since the same quarter one year prior, revenues rose by 15.4%. 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 $60.71 million or 17.92% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -15.63%.
  • The gross profit margin for VANGUARD NATURAL RESOURCES is currently very high, coming in at 79.20%. Regardless of VNR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VNR's net profit margin of 46.36% significantly outperformed against the industry.
  • In its most recent trading session, VNR 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.
  • 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, VANGUARD NATURAL RESOURCES's return on equity significantly trails 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.

Vale

Dividend Yield: 4.60%

Vale (NYSE: VALE) shares currently have a dividend yield of 4.60%.

Vale S.A. engages in the research, production, and marketing of iron ore and pellets, nickel, fertilizers, copper, coal, manganese, ferroalloys, cobalt, platinum group metals, and precious metals in Brazil and internationally. The company has a P/E ratio of 15.11.

The average volume for Vale has been 18,223,000 shares per day over the past 30 days. Vale has a market cap of $84.5 billion and is part of the metals & mining industry. Shares are down 22.9% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Vale as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.15, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has slightly increased to $4,162.84 million or 2.92% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -11.79%.
  • The gross profit margin for VALE SA is rather high; currently it is at 52.79%. Regardless of VALE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VALE's net profit margin of 1.24% 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 Metals & Mining industry. The net income has significantly decreased by 94.9% when compared to the same quarter one year ago, falling from $2,302.44 million to $117.72 million.
  • The share price of VALE SA has not done very well: it is down 14.50% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.

BreitBurn Energy Partners

Dividend Yield: 10.40%

BreitBurn Energy Partners (NASDAQ: BBEP) shares currently have a dividend yield of 10.40%.

BreitBurn Energy Partners L.P. engages in the acquisition, exploitation, and development of oil and gas properties in the United States.

The average volume for BreitBurn Energy Partners has been 1,047,700 shares per day over the past 30 days. BreitBurn Energy Partners has a market cap of $1.8 billion and is part of the energy industry. Shares are down 0.5% year to date as of the close of trading on Thursday.

TheStreet Ratings rates BreitBurn Energy Partners as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.4%. 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.
  • Net operating cash flow has increased to $38.57 million or 31.85% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -15.63%.
  • The gross profit margin for BREITBURN ENERGY PARTNERS LP is currently very high, coming in at 71.78%. Regardless of BBEP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BBEP's net profit margin of 35.22% significantly outperformed against the industry.
  • Despite currently having a low debt-to-equity ratio of 0.54, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that BBEP's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.69 is low and demonstrates weak liquidity.
  • 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, BREITBURN ENERGY PARTNERS LP's return on equity significantly trails 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.

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