Top 5 Yielding Hold-Rated Stocks: QRE, LGCY, BGCP, MSB, NRT

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."

QR Energy

Dividend Yield: 11.90%

QR Energy (NYSE: QRE) shares currently have a dividend yield of 11.90%.

QR Energy, LP, through its subsidiary, QRE Operating, LLC, engages in the acquisition, exploitation, development, and production of oil and natural gas properties in the United States.

The average volume for QR Energy has been 267,100 shares per day over the past 30 days. QR Energy has a market cap of $957.2 million and is part of the energy industry. Shares are down 1.5% year to date as of the close of trading on Wednesday.

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

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 5.5%. Since the same quarter one year prior, revenues rose by 38.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 51.4% when compared to the same quarter one year prior, rising from -$44.66 million to -$21.72 million.
  • QR ENERGY 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, QR ENERGY LP swung to a loss, reporting -$0.15 versus $0.35 in the prior year. This year, the market expects an improvement in earnings ($1.18 versus -$0.15).
  • The debt-to-equity ratio of 1.39 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, QRE's quick ratio is somewhat strong at 1.07, demonstrating the ability to handle short-term liquidity needs.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, QR ENERGY 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.

Legacy Reserves

Dividend Yield: 8.70%

Legacy Reserves (NASDAQ: LGCY) shares currently have a dividend yield of 8.70%.

Legacy Reserves LP, an independent oil and natural gas limited partnership, engages in the acquisition and development of oil and natural gas properties primarily located in the Permian Basin, Mid-Continent, and Rocky Mountain regions of the United States. The company has a P/E ratio of 135.20.

The average volume for Legacy Reserves has been 148,800 shares per day over the past 30 days. Legacy Reserves has a market cap of $1.6 billion and is part of the energy industry. Shares are up 13.6% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Legacy Reserves as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • LGCY's very impressive revenue growth greatly exceeded the industry average of 5.5%. Since the same quarter one year prior, revenues leaped by 85.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 85.5% when compared to the same quarter one year prior, rising from -$23.57 million to -$3.42 million.
  • The gross profit margin for LEGACY RESERVES LP is rather high; currently it is at 53.74%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -3.23% trails the industry average.
  • LEGACY RESERVES 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, LEGACY RESERVES LP reported lower earnings of $1.43 versus $1.71 in the prior year. For the next year, the market is expecting a contraction of 62.2% in earnings ($0.54 versus $1.43).
  • The debt-to-equity ratio of 1.43 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, LGCY has a quick ratio of 0.64, this demonstrates the lack of ability of the company to cover short-term liquidity needs.

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

BGC Partners

Dividend Yield: 8.20%

BGC Partners (NASDAQ: BGCP) shares currently have a dividend yield of 8.20%.

BGC Partners, Inc. operates as a brokerage company, primarily servicing the wholesale financial and real estate markets. It operates through two segments, Financial Services and Real Estate Services. The company has a P/E ratio of 13.27.

The average volume for BGC Partners has been 943,800 shares per day over the past 30 days. BGC Partners has a market cap of $1.0 billion and is part of the financial services industry. Shares are up 68.8% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates BGC Partners as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and notable return on equity. 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:
  • This stock has managed to rise its share value by 63.92% over the past twelve months. Although BGCP 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 5715.5% when compared to the same quarter one year prior, rising from -$0.45 million to $25.33 million.
  • Net operating cash flow has significantly increased by 252.14% to $42.54 million when compared to the same quarter last year. Despite an increase in cash flow, BGC PARTNERS INC's cash flow growth rate is still lower than the industry average growth rate of 272.03%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 8.7%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for BGC PARTNERS INC is rather low; currently it is at 15.27%. Regardless of BGCP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.84% 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.

Mesabi

Dividend Yield: 9.10%

Mesabi (NYSE: MSB) shares currently have a dividend yield of 9.10%.

Mesabi Trust operates as a royalty trust in the United States. The company produces iron ore pellets. It holds interest in the Peter Mitchell mine located in the Mesabi Iron Range near Babbitt, Minnesota. The company has a P/E ratio of 11.20.

The average volume for Mesabi has been 67,800 shares per day over the past 30 days. Mesabi has a market cap of $293.9 million and is part of the financial services industry. Shares are down 12% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Mesabi 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, notable return on equity 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 weak operating cash flow.

Highlights from the ratings report include:
  • MSB 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. To add to this, MSB has a quick ratio of 1.63, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 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 Metals & Mining industry and the overall market, MESABI TRUST's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for MESABI TRUST is currently very high, coming in at 100.00%. MSB has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, MSB's net profit margin of 97.33% significantly outperformed against the industry.
  • 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 29.9% when compared to the same quarter one year ago, falling from $10.87 million to $7.63 million.
  • Net operating cash flow has decreased to $5.94 million or 31.79% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, MESABI TRUST 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.

North European Oil Royalty

Dividend Yield: 9.40%

North European Oil Royalty (NYSE: NRT) shares currently have a dividend yield of 9.40%.

North European Oil Royalty Trust, a grantor trust, holds overriding royalty rights covering gas and oil production in concessions or leases in the Federal Republic of Germany. It holds these rights under contracts with German exploration and development subsidiaries of ExxonMobil Corp. The company has a P/E ratio of 10.07.

The average volume for North European Oil Royalty has been 21,200 shares per day over the past 30 days. North European Oil Royalty has a market cap of $206.3 million and is part of the financial services industry. Shares are unchanged year to date as of the close of trading on Wednesday.

TheStreet Ratings rates North European Oil Royalty as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • NRT's revenue growth has slightly outpaced the industry average of 5.5%. Since the same quarter one year prior, revenues slightly increased by 3.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income increased by 3.8% when compared to the same quarter one year prior, going from $4.68 million to $4.86 million.
  • NORTH EUROPEAN OIL RTY TR's earnings per share improvement from the most recent quarter was slightly positive. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, NORTH EUROPEAN OIL RTY TR reported lower earnings of $2.26 versus $2.46 in the prior year.
  • NRT has underperformed the S&P 500 Index, declining 12.63% 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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