What To Hold: 5 Hold-Rated Dividend Stocks MTR, PFLT, VLCCF, CEL, CCCL

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."

Mesa Royalty

Dividend Yield: 10.80%

Mesa Royalty (NYSE: MTR) shares currently have a dividend yield of 10.80%.

Mesa Royalty Trust holds net overriding royalty interests in various oil and gas producing properties in the United States. It has interests in properties located in the Hugoton field of Kansas; the San Juan Basin field of New Mexico and Colorado; and the Yellow Creek field of Wyoming. The company has a P/E ratio of 12.12.

The average volume for Mesa Royalty has been 5,700 shares per day over the past 30 days. Mesa Royalty has a market cap of $40.4 million and is part of the financial services industry. Shares are up 2.4% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Mesa Royalty as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in net income. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 5.6%. Since the same quarter one year prior, revenues rose by 24.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MTR 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. Along with this, the company maintains a quick ratio of 6.53, which clearly demonstrates the ability to cover short-term cash needs.
  • 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.
  • MESA ROYALTY TRUST has improved earnings per share by 27.0% in the most recent quarter compared to the same quarter a year ago. 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, MESA ROYALTY TRUST reported lower earnings of $1.93 versus $2.96 in the prior year.
  • 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, MESA ROYALTY TRUST's return on equity significantly exceeds that of both the industry average and the S&P 500.

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PennantPark Floating Rate Capital

Dividend Yield: 7.90%

PennantPark Floating Rate Capital (NASDAQ: PFLT) shares currently have a dividend yield of 7.90%.

PennantPark Floating Rate Capital Ltd. is a business development company. It seeks to make secondary direct, debt, equity, and loan investments. The fund seeks to invest through floating rate loans in private or thinly traded or small market-cap, public middle market companies. The company has a P/E ratio of 12.50.

The average volume for PennantPark Floating Rate Capital has been 76,400 shares per day over the past 30 days. PennantPark Floating Rate Capital has a market cap of $204.8 million and is part of the financial services industry. Shares are unchanged year-to-date as of the close of trading on Friday.

TheStreet Ratings rates PennantPark Floating Rate Capital as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and increase in net income. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • PFLT's very impressive revenue growth greatly exceeded the industry average of 8.8%. Since the same quarter one year prior, revenues leaped by 74.8%. 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.
  • The gross profit margin for PENNANTPARK FLOATING RT CAP is rather high; currently it is at 65.94%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 89.36% significantly outperformed against the industry average.
  • 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.
  • 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. When compared to other companies in the Capital Markets industry and the overall market, PENNANTPARK FLOATING RT CAP's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$77.29 million or 308.08% 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.

Knightsbridge Tankers

Dividend Yield: 7.80%

Knightsbridge Tankers (NASDAQ: VLCCF) shares currently have a dividend yield of 7.80%.

Knightsbridge Tankers Limited, a shipping company, engages in the seaborne transportation of crude oil and dry bulk cargoes worldwide. As of December 31, 2012, it owned and operated one very large crude carrier and four Capesize dry bulk carriers.

The average volume for Knightsbridge Tankers has been 461,200 shares per day over the past 30 days. Knightsbridge Tankers has a market cap of $219.8 million and is part of the transportation industry. Shares are up 0.1% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Knightsbridge Tankers as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures 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, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • 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 101.8% when compared to the same quarter one year prior, rising from -$57.01 million to $1.01 million.
  • The current debt-to-equity ratio, 0.37, is low and is below the industry average, implying that there has been successful management of debt levels.
  • The gross profit margin for KNIGHTSBRIDGE TANKERS LTD is rather high; currently it is at 57.25%. Regardless of VLCCF's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VLCCF's net profit margin of 10.13% compares favorably to the industry average.
  • Net operating cash flow has significantly decreased to $3.64 million or 64.98% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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, KNIGHTSBRIDGE TANKERS LTD'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.

Cellcom Israel

Dividend Yield: 7.10%

Cellcom Israel (NYSE: CEL) shares currently have a dividend yield of 7.10%.

Cellcom Israel Ltd. provides cellular communications services in Israel. The company operates in two segments, Cellcom and Netvision. It offers basic and advanced cellular telephone services, text and multimedia messaging services, and advanced cellular content and data services. The company has a P/E ratio of 9.47.

The average volume for Cellcom Israel has been 96,800 shares per day over the past 30 days. Cellcom Israel has a market cap of $1.3 billion and is part of the telecommunications industry. Shares are down 3.7% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Cellcom Israel as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and generally higher debt management risk.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, CEL's share price has jumped by 60.42%, 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.
  • CEL, with its decline in revenue, underperformed when compared the industry average of 6.4%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. 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 Wireless Telecommunication Services industry. The net income has significantly decreased by 52.1% when compared to the same quarter one year ago, falling from $32.21 million to $15.44 million.
  • Net operating cash flow has declined marginally to $133.81 million or 0.31% 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.

China Ceramics

Dividend Yield: 8.40%

China Ceramics (NASDAQ: CCCL) shares currently have a dividend yield of 8.40%.

China Ceramics Co., Ltd. engages in the manufacture and sale of ceramic tiles for exterior siding and interior flooring, and design in residential and commercial buildings in the People's Republic of China and internationally. The company has a P/E ratio of 12.58.

The average volume for China Ceramics has been 66,200 shares per day over the past 30 days. China Ceramics has a market cap of $48.8 million and is part of the materials & construction industry. Shares are down 1.2% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates China Ceramics 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 and attractive valuation levels. 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:
  • CCCL's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CCCL has a quick ratio of 2.00, which demonstrates the ability of the company to cover short-term liquidity needs.
  • CCCL, with its decline in revenue, underperformed when compared the industry average of 7.9%. Since the same quarter one year prior, revenues fell by 11.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for CHINA CERAMICS CO LTD is currently extremely low, coming in at 14.88%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 1.27% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$23.99 million or 251.72% 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.

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