What To Hold: 5 Hold-Rated Dividend Stocks KFN, OFC, POT, RWT, APL

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."

KKR Financial Holdings

Dividend Yield: 6.80%

KKR Financial Holdings (NYSE: KFN) shares currently have a dividend yield of 6.80%.

KKR Financial Holdings LLC, together with its subsidiaries, operates as a specialty finance company with expertise in a range of asset classes. The company has a P/E ratio of 9.21.

The average volume for KKR Financial Holdings has been 2,393,300 shares per day over the past 30 days. KKR Financial Holdings has a market cap of $2.6 billion and is part of the real estate industry. Shares are up 6.4% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates KKR Financial Holdings as a hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, 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 weak operating cash flow.

Highlights from the ratings report include:
  • The gross profit margin for KKR FINANCIAL HOLDINGS LLC is currently very high, coming in at 73.47%. Regardless of KFN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, KFN's net profit margin of 28.90% 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 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 Diversified Financial Services industry. The net income has significantly decreased by 64.4% when compared to the same quarter one year ago, falling from $111.96 million to $39.89 million.
  • The debt-to-equity ratio is very high at 2.32 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.

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

Corporate Office Properties

Dividend Yield: 4.50%

Corporate Office Properties (NYSE: OFC) shares currently have a dividend yield of 4.50%.

Corporate Office Properties Trust, a real estate investment trust (REIT), engages in the acquisition, development, ownership, management, and leasing of suburban office properties. The company has a P/E ratio of 811.00.

The average volume for Corporate Office Properties has been 636,800 shares per day over the past 30 days. Corporate Office Properties has a market cap of $2.1 billion and is part of the real estate industry. Shares are up 2.5% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Corporate Office Properties as a hold. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, compelling growth in net income and revenue growth. 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:
  • CORP OFFICE PPTYS TR INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CORP OFFICE PPTYS TR INC continued to lose money by earning -$0.25 versus -$1.32 in the prior year. This year, the market expects an improvement in earnings ($0.05 versus -$0.25).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 84.5% when compared to the same quarter one year prior, rising from -$19.16 million to -$2.96 million.
  • Compared to its price level of one year ago, OFC is down 5.91% to its most recent closing price of 23.89. Looking ahead, our view is that this company's fundamentals will not have much impact either way, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, CORP OFFICE PPTYS TR INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for CORP OFFICE PPTYS TR INC is rather low; currently it is at 15.70%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, OFC's net profit margin of -2.17% significantly underperformed when compared to 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.

Potash Corporation of Saskatchewan

Dividend Yield: 4.30%

Potash Corporation of Saskatchewan (NYSE: POT) shares currently have a dividend yield of 4.30%.

Potash Corporation of Saskatchewan Inc., together with its subsidiaries, produces and sells fertilizers and related industrial and feed products primarily in the United States and Canada. The company mines and produces potash, which is used as fertilizer. The company has a P/E ratio of 14.50.

The average volume for Potash Corporation of Saskatchewan has been 6,361,200 shares per day over the past 30 days. Potash Corporation of Saskatchewan has a market cap of $28.1 billion and is part of the chemicals industry. Shares are up 1.6% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Potash Corporation of Saskatchewan as a hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins and largely solid financial position with reasonable debt levels by most measures. 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:
  • 40.99% is the gross profit margin for POTASH CORP SASK INC which we consider to be strong. Regardless of POT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, POT's net profit margin of 23.42% significantly outperformed against the industry.
  • The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.80 is somewhat weak and could be cause for future problems.
  • The revenue fell significantly faster than the industry average of 7.3%. Since the same quarter one year prior, revenues fell by 29.1%. 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 Chemicals industry. The net income has significantly decreased by 44.8% when compared to the same quarter one year ago, falling from $645.00 million to $356.00 million.
  • Net operating cash flow has decreased to $616.00 million or 18.84% 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.

Redwood

Dividend Yield: 5.80%

Redwood (NYSE: RWT) shares currently have a dividend yield of 5.80%.

Redwood Trust, Inc. engages in investing, financing, and managing real estate-related assets. The company has a P/E ratio of 8.94.

The average volume for Redwood has been 789,700 shares per day over the past 30 days. Redwood has a market cap of $1.6 billion and is part of the real estate industry. Shares are down 2% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Redwood 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 find that the growth in the company's net income has been quite unimpressive.

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 Real Estate Investment Trusts (REITs) industry and the overall market, REDWOOD TRUST INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 302.35% to $248.09 million when compared to the same quarter last year. In addition, REDWOOD TRUST INC has also vastly surpassed the industry average cash flow growth rate of 8.55%.
  • 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.
  • RWT, with its decline in revenue, underperformed when compared the industry average of 9.6%. Since the same quarter one year prior, revenues slightly dropped by 3.9%. 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 44.8% when compared to the same quarter one year ago, falling from $39.70 million to $21.93 million.

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

Atlas Pipeline Partners

Dividend Yield: 7.10%

Atlas Pipeline Partners (NYSE: APL) shares currently have a dividend yield of 7.10%.

Atlas Pipeline Partners, L.P. operates in the gathering and processing segments of the midstream natural gas industry. The company operates in two segments, Gathering and Processing; and Transportation, Treating, and Other.

The average volume for Atlas Pipeline Partners has been 488,200 shares per day over the past 30 days. Atlas Pipeline Partners has a market cap of $2.8 billion and is part of the energy industry. Shares are down 1.7% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Atlas Pipeline Partners as a hold. The company's strengths can be seen in multiple areas, such as its robust 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:
  • APL's very impressive revenue growth greatly exceeded the industry average of 5.6%. Since the same quarter one year prior, revenues leaped by 97.2%. 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.
  • Net operating cash flow has increased to $79.40 million or 30.18% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.96%.
  • 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.
  • ATLAS PIPELINE PARTNER 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, ATLAS PIPELINE PARTNER LP reported lower earnings of $0.97 versus $5.22 in the prior year. For the next year, the market is expecting a contraction of 193.8% in earnings (-$0.91 versus $0.97).
  • 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 244.2% when compared to the same quarter one year ago, falling from -$7.87 million to -$27.08 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

Stocks Lower as Optimism Wanes Over China Trade Talks

Stocks Lower as Optimism Wanes Over China Trade Talks

Imagining the Stock Market in 10 Years

Imagining the Stock Market in 10 Years

Video: Jim Cramer on the Markets, Tiffany, Micron Technology and Union Pacific

Video: Jim Cramer on the Markets, Tiffany, Micron Technology and Union Pacific

Red Robin Slumps After Earnings Miss

Red Robin Slumps After Earnings Miss

Comcast Considering All-Cash Bid for Fox as Disney Battle Heads to the Wire

Comcast Considering All-Cash Bid for Fox as Disney Battle Heads to the Wire