What To Hold: 4 Hold-Rated Dividend Stocks NTI, OFC, LINE, HCN

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

Northern Tier Energy

Dividend Yield: 4.80%

Northern Tier Energy (NYSE: NTI) shares currently have a dividend yield of 4.80%.

Northern Tier Energy LP operates as an independent downstream energy company with refining, retail, and pipeline operations in the United States. The company operates through two segments, Refining and Retail. The company has a P/E ratio of 8.09.

The average volume for Northern Tier Energy has been 876,300 shares per day over the past 30 days. Northern Tier Energy has a market cap of $2.4 billion and is part of the energy industry. Shares are up 2.9% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Northern Tier Energy as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and poor profit margins.

Highlights from the ratings report include:
  • Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, NORTHERN TIER ENERGY LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The revenue growth came in higher than the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 13.8%. 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.
  • 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.
  • 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 55.5% when compared to the same quarter one year ago, falling from $61.10 million to $27.20 million.
  • The gross profit margin for NORTHERN TIER ENERGY LP is currently extremely low, coming in at 3.74%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 2.01% trails that of 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.

Corporate Office Properties

Dividend Yield: 4.40%

Corporate Office Properties (NYSE: OFC) shares currently have a dividend yield of 4.40%.

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 836.33.

The average volume for Corporate Office Properties has been 612,800 shares per day over the past 30 days. Corporate Office Properties has a market cap of $2.2 billion and is part of the real estate industry. Shares are up 4.2% year-to-date as of the close of trading on Friday.

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 ($0.81 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 7.08% to its most recent closing price of 25.09. 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.

Linn Energy

Dividend Yield: 9.20%

Linn Energy (NASDAQ: LINE) shares currently have a dividend yield of 9.20%.

Linn Energy, LLC, an independent oil and natural gas company, engages in the acquisition and development of oil and natural gas properties.

The average volume for Linn Energy has been 2,192,700 shares per day over the past 30 days. Linn Energy has a market cap of $7.9 billion and is part of the energy industry. Shares are up 7.3% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Linn Energy 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 a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • LINE's very impressive revenue growth greatly exceeded the industry average of 5.7%. Since the same quarter one year prior, revenues leaped by 923.3%. 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 93.0% when compared to the same quarter one year prior, rising from -$430.01 million to -$30.06 million.
  • LINN ENERGY LLC 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, LINN ENERGY LLC swung to a loss, reporting -$1.86 versus $2.21 in the prior year. This year, the market expects an improvement in earnings ($1.07 versus -$1.86).
  • LINE has underperformed the S&P 500 Index, declining 12.19% 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.
  • Currently the debt-to-equity ratio of 1.61 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.46, which clearly demonstrates the inability to cover short-term cash needs.

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

Health Care REIT

Dividend Yield: 5.50%

Health Care REIT (NYSE: HCN) shares currently have a dividend yield of 5.50%.

Health Care REIT, Inc. is an independent equity real estate investment trust. The firm engages in acquiring, planning, developing, managing, repositioning and monetizing of real estate assets. It primarily invests in the real estate markets of the United States. The company has a P/E ratio of 76.75.

The average volume for Health Care REIT has been 2,035,000 shares per day over the past 30 days. Health Care REIT has a market cap of $16.2 billion and is part of the real estate industry. Shares are up 4.4% year-to-date as of the close of trading on Friday.

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

Highlights from the ratings report include:
  • HCN's very impressive revenue growth greatly exceeded the industry average of 9.6%. Since the same quarter one year prior, revenues leaped by 70.6%. 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 slightly increased to $219.17 million or 3.17% when compared to the same quarter last year. Despite an increase in cash flow, HEALTH CARE REIT INC's average is still marginally south of the industry average growth rate of 8.45%.
  • HEALTH CARE REIT INC's earnings per share declined by 44.4% 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, HEALTH CARE REIT INC increased its bottom line by earning $0.46 versus $0.34 in the prior year. For the next year, the market is expecting a contraction of 10.9% in earnings ($0.41 versus $0.46).
  • The gross profit margin for HEALTH CARE REIT INC is rather low; currently it is at 18.93%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.74% significantly trails the industry average.
  • The share price of HEALTH CARE REIT INC has not done very well: it is down 10.94% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.

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