Best Of The Hold-Rated Dividend Stocks: Top 3 Companies: ARR, EEP, CM

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 3 stocks with substantial yields, that ultimately, we have rated "Hold."

ARMOUR Residential REIT

Dividend Yield: 15.30%

ARMOUR Residential REIT (NYSE: ARR) shares currently have a dividend yield of 15.30%.

ARMOUR Residential REIT, Inc. is a real estate investment trust launched and managed by ARMOUR Residential Management LLC. It invests in the real estate markets of the United States. The company has a P/E ratio of 2.29.

The average volume for ARMOUR Residential REIT has been 4,838,900 shares per day over the past 30 days. ARMOUR Residential REIT has a market cap of $1.5 billion and is part of the real estate industry. Shares are down 39.6% year to date as of the close of trading on Friday.

TheStreet Ratings rates ARMOUR Residential REIT as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • 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. In comparison to the other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, ARMOUR RESIDENTIAL REIT INC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • ARR, with its very weak revenue results, has greatly underperformed against the industry average of 9.5%. Since the same quarter one year prior, revenues plummeted by 216.3%. Weakness in the company's revenue seems to have hurt the 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 when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 518.5% when compared to the same quarter one year ago, falling from $54.94 million to -$229.94 million.
  • Net operating cash flow has decreased to $86.27 million or 18.52% 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.

Enbridge Energy Partners

Dividend Yield: 7.20%

Enbridge Energy Partners (NYSE: EEP) shares currently have a dividend yield of 7.20%.

Enbridge Energy Partners, L.P. owns and operates crude oil and liquid petroleum transportation and storage assets; and natural gas gathering, treating, processing, transportation, and marketing assets in the United States.

The average volume for Enbridge Energy Partners has been 650,000 shares per day over the past 30 days. Enbridge Energy Partners has a market cap of $7.6 billion and is part of the energy industry. Shares are up 7.5% year to date as of the close of trading on Friday.

TheStreet Ratings rates Enbridge 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 increase in stock price during the past year. 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 14.4%. 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 $465.00 million or 32.17% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 1.02%.
  • 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. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • ENBRIDGE ENERGY PRTNRS -LP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, ENBRIDGE ENERGY PRTNRS -LP reported lower earnings of $1.25 versus $1.89 in the prior year. For the next year, the market is expecting a contraction of 42.4% in earnings ($0.72 versus $1.25).
  • 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 80.9% when compared to the same quarter one year ago, falling from $215.20 million to $41.00 million.

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

Canadian Imperial Bank of Commerce

Dividend Yield: 4.30%

Canadian Imperial Bank of Commerce (NYSE: CM) shares currently have a dividend yield of 4.30%.

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 10.51.

The average volume for Canadian Imperial Bank of Commerce has been 177,200 shares per day over the past 30 days. Canadian Imperial Bank of Commerce has a market cap of $34.2 billion and is part of the banking industry. Shares are up 6.3% year to date as of the close of trading on Friday.

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 growth in earnings per share. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive.

Highlights from the ratings report include:
  • CM's revenue growth has slightly outpaced the industry average of 3.1%. 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 gross profit margin for CANADIAN IMPERIAL BANK is currently very high, coming in at 71.68%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CM's net profit margin of 20.59% significantly trails the industry average.
  • 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.
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Commercial Banks industry average. 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.

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

Other helpful dividend tools from TheStreet:

null

More from Markets

Three Big Factors That Rocked the Stock Market Tuesday

Three Big Factors That Rocked the Stock Market Tuesday

Dow Tumbles Over 400 Points; S&P 500 and Nasdaq Also Finish Lower

Dow Tumbles Over 400 Points; S&P 500 and Nasdaq Also Finish Lower

Caterpillar Bulldozes Industrial Sector With Bad News on Earnings Call

Caterpillar Bulldozes Industrial Sector With Bad News on Earnings Call

Jim Cramer: If You're Afraid of the 10-Year Yield, Go to Cash

Jim Cramer: If You're Afraid of the 10-Year Yield, Go to Cash

Eli Lilly CEO Expresses Confidence in New Rheumatoid Arthritis Drug

Eli Lilly CEO Expresses Confidence in New Rheumatoid Arthritis Drug