What To Hold: Top 4 Hold-Rated Dividend Stocks: SFL, RAS, PGH, 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."

Ship Finance International

Dividend Yield: 9.10%

Ship Finance International (NYSE: SFL) shares currently have a dividend yield of 9.10%.

Ship Finance International Limited, through its subsidiaries, engages in the ownership and operation of vessels and offshore related assets in Bermuda, Cyprus, Malta, Liberia, Norway, Singapore, the United Kingdom, and the Marshall Islands. The company has a P/E ratio of 7.69.

The average volume for Ship Finance International has been 613,200 shares per day over the past 30 days. Ship Finance International has a market cap of $1.6 billion and is part of the transportation industry. Shares are up 1.5% year to date as of the close of trading on Friday.

TheStreet Ratings rates Ship Finance International as a hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 57.92% to $28.22 million when compared to the same quarter last year. In addition, SHIP FINANCE INTL LTD has also vastly surpassed the industry average cash flow growth rate of 0.99%.
  • The gross profit margin for SHIP FINANCE INTL LTD is rather high; currently it is at 63.79%. Regardless of SFL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SFL's net profit margin of 37.98% significantly outperformed against the industry.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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.
  • The debt-to-equity ratio of 1.45 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, SFL has a quick ratio of 0.56, this demonstrates the lack of ability of the company to cover 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, SHIP FINANCE INTL LTD's return on equity is significantly below that of the industry average and is below that of 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.

Rait Financial

Dividend Yield: 7.40%

Rait Financial (NYSE: RAS) shares currently have a dividend yield of 7.40%.

RAIT Financial Trust operates as a self-managed and self-advised real estate investment trust (REIT). The company, through its subsidiaries, invests in, manages, and services real estate-related assets with a focus on commercial real estate.

The average volume for Rait Financial has been 611,200 shares per day over the past 30 days. Rait Financial has a market cap of $566.3 million and is part of the real estate industry. Shares are up 42.6% year to date as of the close of trading on Friday.

TheStreet Ratings rates Rait Financial as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase 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:
  • Since the same quarter one year prior, revenues rose by 10.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 365.35% to $23.56 million when compared to the same quarter last year.
  • RAIT FINANCIAL TRUST has improved earnings per share by 35.1% 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, RAIT FINANCIAL TRUST reported poor results of -$3.92 versus -$1.36 in the prior year. This year, the market expects an improvement in earnings ($0.61 versus -$3.92).
  • 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.
  • The gross profit margin for RAIT FINANCIAL TRUST is rather low; currently it is at 20.78%. Regardless of RAS's low profit margin, it has managed to increase from the same period last year.

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

Pengrowth Energy

Dividend Yield: 7.20%

Pengrowth Energy (NYSE: PGH) shares currently have a dividend yield of 7.20%.

Pengrowth Energy Corporation engages in the acquisition, exploration, development, and production of oil and natural gas reserves in Canada.

The average volume for Pengrowth Energy has been 1,452,900 shares per day over the past 30 days. Pengrowth Energy has a market cap of $3.3 billion and is part of the energy industry. Shares are up 30.2% year to date as of the close of trading on Friday.

TheStreet Ratings rates Pengrowth Energy as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures 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 disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.4%. Since the same quarter one year prior, revenues rose by 16.1%. 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 current debt-to-equity ratio, 0.42, is low and is below the industry average, implying that there has been successful management of debt levels.
  • PGH's share price has surged by 26.38% over the past year, reflecting the market's general trend, despite their weak earnings growth during the last quarter. Although PGH had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 351.0% when compared to the same quarter one year ago, falling from -$23.79 million to -$107.30 million.
  • 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PENGROWTH ENERGY CORP'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.

PetroLogistics

Dividend Yield: 15.10%

PetroLogistics (NYSE: PDH) shares currently have a dividend yield of 15.10%.

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 9.22.

The average volume for PetroLogistics has been 197,000 shares per day over the past 30 days. PetroLogistics has a market cap of $1.7 billion and is part of the chemicals industry. Shares are down 10.6% year to date as of the close of trading on Friday.

TheStreet Ratings rates PetroLogistics as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year and notable return on equity. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.3%. Since the same quarter one year prior, revenues rose by 27.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • This stock has managed to rise its share value by 6.25% over the past twelve months. 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.
  • PETROLOGISTICS LP has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. 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 ($1.52 versus -$0.41).
  • PDH's debt-to-equity ratio of 0.98 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.

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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