5 Hold-Rated Dividend Stocks: NTI, HCN, RAS, KRFT, IRM

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."

Northern Tier Energy

Dividend Yield: 5.00%

Northern Tier Energy (NYSE: NTI) shares currently have a dividend yield of 5.00%.

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 7.68.

The average volume for Northern Tier Energy has been 804,500 shares per day over the past 30 days. Northern Tier Energy has a market cap of $2.3 billion and is part of the energy industry. Shares are down 1.4% year-to-date as of the close of trading on Wednesday.

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, poor profit margins and a generally disappointing performance in the stock itself.

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 1.4%. 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.
  • NTI's debt-to-equity ratio of 0.69 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 0.79 is weak.
  • 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.
  • 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.

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 78.95.

The average volume for Health Care REIT has been 2,132,500 shares per day over the past 30 days. Health Care REIT has a market cap of $16.6 billion and is part of the real estate industry. Shares are up 6.2% year-to-date as of the close of trading on Wednesday.

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 9.7%. 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. In addition, HEALTH CARE REIT INC has also modestly surpassed the industry average cash flow growth rate of -0.44%.
  • 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 9.46% 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.

Rait Financial

Dividend Yield: 7.50%

Rait Financial (NYSE: RAS) shares currently have a dividend yield of 7.50%.

RAIT Financial Trust operates as a self-managed and self-advised real estate investment trust (REIT). The company, through its subsidiaries, invests in, manages, and services real estate-related assets with a focus on commercial real estate.

The average volume for Rait Financial has been 1,341,800 shares per day over the past 30 days. Rait Financial has a market cap of $693.9 million and is part of the real estate industry. Shares are down 5.6% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Rait Financial as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • RAS's revenue growth has slightly outpaced the industry average of 9.7%. Since the same quarter one year prior, revenues rose by 10.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
  • RAIT FINANCIAL TRUST has improved earnings per share by 35.1% 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, RAIT FINANCIAL TRUST reported poor results of -$3.92 versus -$1.36 in the prior year. This year, the market expects an improvement in earnings ($0.61 versus -$3.92).
  • The gross profit margin for RAIT FINANCIAL TRUST is rather low; currently it is at 20.78%. Regardless of RAS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, RAS's net profit margin of -16.59% significantly underperformed when compared to the industry average.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, RAIT FINANCIAL TRUST'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.

Kraft Foods Group

Dividend Yield: 4.10%

Kraft Foods Group (NASDAQ: KRFT) shares currently have a dividend yield of 4.10%.

Kraft Foods Group, Inc. operates as a consumer packaged food and beverage company in North America. The company has a P/E ratio of 16.52.

The average volume for Kraft Foods Group has been 2,970,000 shares per day over the past 30 days. Kraft Foods Group has a market cap of $30.4 billion and is part of the food & beverage industry. Shares are down 5.2% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Kraft Foods Group 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 growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:
  • Compared to other companies in the Food Products industry and the overall market, KRAFT FOODS GROUP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has improved to $508.00 million from having none in the same quarter last year. Since the company had no net operating cash flow for the prior period, we cannot calculate a percent change in order to compare its growth rate with that of its industry average.
  • The net income growth from the same quarter one year ago has exceeded that of the Food Products industry average, but is less than that of the S&P 500. The net income increased by 7.3% when compared to the same quarter one year prior, going from $466.00 million to $500.00 million.
  • The gross profit margin for KRAFT FOODS GROUP INC is currently lower than what is desirable, coming in at 33.98%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 11.37% is above that of the industry average.
  • The debt-to-equity ratio is very high at 2.06 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, KRFT maintains a poor quick ratio of 0.81, which illustrates the inability to avoid short-term cash problems.

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

Iron Mountain

Dividend Yield: 4.10%

Iron Mountain (NYSE: IRM) shares currently have a dividend yield of 4.10%.

Iron Mountain Incorporated, together with its subsidiaries, provides information management services primarily in North America, Europe, Latin America, and the Asia Pacific. The company has a P/E ratio of 138.90.

The average volume for Iron Mountain has been 2,066,600 shares per day over the past 30 days. Iron Mountain has a market cap of $5.0 billion and is part of the computer software & services industry. Shares are down 12.8% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Iron Mountain as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, 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, deteriorating net income and generally higher debt management risk.

Highlights from the ratings report include:
  • IRM's revenue growth has slightly outpaced the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 1.0%. 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 $120.68 million or 36.29% when compared to the same quarter last year. In addition, IRON MOUNTAIN INC has also vastly surpassed the industry average cash flow growth rate of -21.65%.
  • The gross profit margin for IRON MOUNTAIN INC is rather high; currently it is at 58.89%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 0.53% trails 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 Commercial Services & Supplies industry. The net income has significantly decreased by 92.3% when compared to the same quarter one year ago, falling from $52.81 million to $4.05 million.
  • The debt-to-equity ratio is very high at 3.80 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, IRM maintains a poor quick ratio of 0.99, which illustrates the inability to avoid short-term cash problems.

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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