What To Hold: 4 Hold-Rated Dividend Stocks CMO, NGPC, HRZN, MCEP

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."

Capstead Mortgage Corporation

Dividend Yield: 10.00%

Capstead Mortgage Corporation (NYSE: CMO) shares currently have a dividend yield of 10.00%.

Capstead Mortgage Corporation operates as a real estate investment trust in the United States. The company has a P/E ratio of 14.12.

The average volume for Capstead Mortgage Corporation has been 908,700 shares per day over the past 30 days. Capstead Mortgage Corporation has a market cap of $1.2 billion and is part of the real estate industry. Shares are up 2.2% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Capstead Mortgage Corporation 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 feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The gross profit margin for CAPSTEAD MORTGAGE CORP is currently very high, coming in at 91.38%. Regardless of CMO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CMO's net profit margin of 52.93% significantly outperformed against the industry.
  • The revenue fell significantly faster than the industry average of 9.6%. Since the same quarter one year prior, revenues fell by 26.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CAPSTEAD MORTGAGE CORP's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $67.42 million or 19.23% 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.

NGP Capital Resources Company

Dividend Yield: 8.60%

NGP Capital Resources Company (NASDAQ: NGPC) shares currently have a dividend yield of 8.60%.

NGP Capital Resources Company is a business development company specializing in investments in small and mid size and middle market companies. The company has a P/E ratio of 185.75.

The average volume for NGP Capital Resources Company has been 51,300 shares per day over the past 30 days. NGP Capital Resources Company has a market cap of $152.3 million and is part of the financial services industry. Shares are up 0.1% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates NGP Capital Resources Company as a hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and relatively poor performance when compared with the S&P 500 during the past year.

Highlights from the ratings report include:
  • The gross profit margin for NGP CAPITAL RESOURCES CO is rather high; currently it is at 55.30%. Regardless of NGPC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NGPC's net profit margin of 84.66% significantly outperformed against the industry.
  • Net operating cash flow has significantly increased by 102.72% to $2.40 million when compared to the same quarter last year. Despite an increase in cash flow of 102.72%, NGP CAPITAL RESOURCES CO is still growing at a significantly lower rate than the industry average of 255.90%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 14.8%. Since the same quarter one year prior, revenues slightly dropped by 5.7%. 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 Capital Markets industry. The net income has significantly decreased by 58.7% when compared to the same quarter one year ago, falling from $12.23 million to $5.05 million.
  • 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 Capital Markets industry and the overall market on the basis of return on equity, NGP CAPITAL RESOURCES CO underperformed against that of the industry average and is significantly less than that of 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.

Horizon Technology Finance

Dividend Yield: 9.60%

Horizon Technology Finance (NASDAQ: HRZN) shares currently have a dividend yield of 9.60%.

Horizon Technology Finance Corporation, a specialty finance company, lends to and invests in development-stage companies in the United States. The company has a P/E ratio of 11.75.

The average volume for Horizon Technology Finance has been 47,600 shares per day over the past 30 days. Horizon Technology Finance has a market cap of $137.6 million and is part of the financial services industry. Shares are up 0.9% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Horizon Technology Finance as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins 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 and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 14.8%. Since the same quarter one year prior, revenues rose by 31.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for HORIZON TECHNOLOGY FINANCE is rather high; currently it is at 65.15%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 44.62% significantly outperformed against the industry average.
  • Net operating cash flow has slightly increased to -$16.25 million or 7.16% when compared to the same quarter last year. Despite an increase in cash flow of 7.16%, HORIZON TECHNOLOGY FINANCE is still growing at a significantly lower rate than the industry average of 255.90%.
  • 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 Capital Markets industry and the overall market on the basis of return on equity, HORIZON TECHNOLOGY FINANCE underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • In its most recent trading session, HRZN 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, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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

Mid-Con Energy Partners

Dividend Yield: 9.10%

Mid-Con Energy Partners (NASDAQ: MCEP) shares currently have a dividend yield of 9.10%.

Mid-Con Energy Partners, LP engages in the acquisition, exploitation, development, and production of oil and natural gas properties in North America. The company has a P/E ratio of 17.20.

The average volume for Mid-Con Energy Partners has been 78,700 shares per day over the past 30 days. Mid-Con Energy Partners has a market cap of $438.0 million and is part of the energy industry. Shares are up 2.3% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Mid-Con Energy Partners as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and generally higher debt management risk.

Highlights from the ratings report include:
  • MCEP's very impressive revenue growth greatly exceeded the industry average of 5.7%. Since the same quarter one year prior, revenues leaped by 59.4%. 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. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MID-CON ENERGY PARTNERS -LP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • 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.
  • Currently the debt-to-equity ratio of 1.68 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, MCEP's quick ratio is somewhat strong at 1.32, demonstrating the ability to handle short-term liquidity needs.
  • Net operating cash flow has declined marginally to $12.90 million or 3.72% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, MID-CON ENERGY PARTNERS -LP 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.

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