Best Of The Hold-Rated Dividend Stocks: Top 5 Companies: NLY, WIN, FE, IVR, XTEX

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."

Annaly Capital Management

Dividend Yield: 13.90%

Annaly Capital Management (NYSE: NLY) shares currently have a dividend yield of 13.90%.

Annaly Capital Management, Inc. owns, manages, and finances a portfolio of real estate related investments in United States. The company has a P/E ratio of 2.96.

The average volume for Annaly Capital Management has been 14,417,200 shares per day over the past 30 days. Annaly Capital Management has a market cap of $9.5 billion and is part of the real estate industry. Shares are down 29.8% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Annaly Capital Management as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, attractive 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, ANNALY CAPITAL MANAGEMENT's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for ANNALY CAPITAL MANAGEMENT is currently very high, coming in at 91.13%. Regardless of NLY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NLY's net profit margin of 29.04% compares favorably to 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 Real Estate Investment Trusts (REITs) industry. The net income has decreased by 14.4% when compared to the same quarter one year ago, dropping from $224.76 million to $192.46 million.
  • Net operating cash flow has significantly decreased to $810.87 million or 77.46% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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

Windstream Holdings

Dividend Yield: 12.10%

Windstream Holdings (NASDAQ: WIN) shares currently have a dividend yield of 12.10%.

Windstream Holdings, Inc. provides communications and technology solutions in the United States. The company offers managed services and cloud computing services to businesses, as well as broadband, voice, and video services to consumers primarily in rural markets. The company has a P/E ratio of 39.29.

The average volume for Windstream Holdings has been 5,824,200 shares per day over the past 30 days. Windstream Holdings has a market cap of $4.9 billion and is part of the telecommunications industry. Shares are down 2.9% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Windstream Holdings as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, 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, unimpressive growth in net income and generally higher debt management risk.

Highlights from the ratings report include:
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Diversified Telecommunication Services industry and the overall market, WINDSTREAM HOLDINGS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $448.10 million or 10.15% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -7.87%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.4%. Since the same quarter one year prior, revenues slightly dropped by 2.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The debt-to-equity ratio is very high at 10.35 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, WIN has a quick ratio of 0.50, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • In its most recent trading session, WIN 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. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement 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.

FirstEnergy

Dividend Yield: 6.80%

FirstEnergy (NYSE: FE) shares currently have a dividend yield of 6.80%.

FirstEnergy Corp., a diversified energy holding company, engages in the generation, transmission, and distribution of electricity in the United States. The company operates in Regulated Distribution, Regulated Transmission, and Competitive Energy Services segments. The company has a P/E ratio of 135.50.

The average volume for FirstEnergy has been 4,352,600 shares per day over the past 30 days. FirstEnergy has a market cap of $13.6 billion and is part of the utilities industry. Shares are down 23.2% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates FirstEnergy as a hold. The company's strongest point has been its a solid financial position based on a variety of debt and liquidity measures that we have looked at. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • FE, with its decline in revenue, slightly underperformed the industry average of 1.9%. Since the same quarter one year prior, revenues slightly dropped by 0.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • FIRSTENERGY CORP's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, FIRSTENERGY CORP reported lower earnings of $1.81 versus $2.13 in the prior year. This year, the market expects an improvement in earnings ($2.99 versus $1.81).
  • 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 Electric Utilities industry. The net income has significantly decreased by 48.7% when compared to the same quarter one year ago, falling from $425.00 million to $218.00 million.
  • The gross profit margin for FIRSTENERGY CORP is currently lower than what is desirable, coming in at 28.54%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 5.42% trails that of the industry average.
  • Net operating cash flow has declined marginally to $1,178.00 million or 2.96% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, FIRSTENERGY CORP 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.

Invesco Mortgage Capital

Dividend Yield: 13.70%

Invesco Mortgage Capital (NYSE: IVR) shares currently have a dividend yield of 13.70%.

Invesco Mortgage Capital Inc., a real estate investment trust (REIT), focuses on investing in, financing, and managing residential and commercial mortgage-backed securities and mortgage loans. It invests in residential mortgage-backed securities for which a U.S. The company has a P/E ratio of 6.28.

The average volume for Invesco Mortgage Capital has been 1,480,900 shares per day over the past 30 days. Invesco Mortgage Capital has a market cap of $2.0 billion and is part of the real estate industry. Shares are down 26.4% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Invesco Mortgage Capital as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, 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 disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 9.5%. Since the same quarter one year prior, revenues rose by 20.2%. 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 gross profit margin for INVESCO MORTGAGE CAPITAL INC is currently very high, coming in at 92.31%. Regardless of IVR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, IVR's net profit margin of -3.45% significantly underperformed when compared to the industry average.
  • INVESCO MORTGAGE CAPITAL INC 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 two years. We anticipate that this should continue in the coming year. During the past fiscal year, INVESCO MORTGAGE CAPITAL INC reported lower earnings of $2.89 versus $3.45 in the prior year. For the next year, the market is expecting a contraction of 22.5% in earnings ($2.24 versus $2.89).
  • 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 107.0% when compared to the same quarter one year ago, falling from $85.75 million to -$5.97 million.

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

Crosstex Energy

Dividend Yield: 5.20%

Crosstex Energy (NASDAQ: XTEX) shares currently have a dividend yield of 5.20%.

Crosstex Energy, L.P. operates as an independent midstream energy company.

The average volume for Crosstex Energy has been 437,000 shares per day over the past 30 days. Crosstex Energy has a market cap of $2.4 billion and is part of the energy industry. Shares are up 78.3% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Crosstex Energy as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance 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 slightly increased by 5.3%. 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.
  • Compared to its closing price of one year ago, XTEX's share price has jumped by 79.07%, exceeding the performance of the broader market during that same time frame. 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.
  • XTEX's debt-to-equity ratio of 0.87 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. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.81 is weak.
  • CROSSTEX ENERGY 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, CROSSTEX ENERGY LP reported poor results of -$1.01 versus -$0.38 in the prior year. For the next year, the market is expecting a contraction of 41.1% in earnings (-$1.43 versus -$1.01).
  • 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 389.7% when compared to the same quarter one year ago, falling from -$16.10 million to -$78.84 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

If you liked this article you might like

Intuitive Surgical, Chicago Mercantile Exchange: 'Mad Money' Lightning Round

Intuitive Surgical, Chicago Mercantile Exchange: 'Mad Money' Lightning Round

A Roaring, Rip-Snorting Bull: Cramer's 'Mad Money' Recap (Wednesday 11/1/17)

A Roaring, Rip-Snorting Bull: Cramer's 'Mad Money' Recap (Wednesday 11/1/17)

Which Way Are These Stocks Going?

Which Way Are These Stocks Going?

5 Amazing Dividend Stocks in This Uncertain Market

5 Amazing Dividend Stocks in This Uncertain Market

10 High-Yielding Stocks to Own Ahead of a Surprising Late Summer Market Swoon

10 High-Yielding Stocks to Own Ahead of a Surprising Late Summer Market Swoon