5 Hold-Rated Dividend Stocks: TWO, HME, PDM, PCG, WRI

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."

Two Harbors Investment

Dividend Yield: 10.60%

Two Harbors Investment (NYSE: TWO) shares currently have a dividend yield of 10.60%.

Two Harbors Investment Corp. operates as a real estate investment trust (REIT) that focuses on investing in, financing, and managing residential mortgage-backed securities (RMBS), residential mortgage loans, and other financial assets. The company has a P/E ratio of 5.97.

The average volume for Two Harbors Investment has been 3,777,900 shares per day over the past 30 days. Two Harbors Investment has a market cap of $3.6 billion and is part of the real estate industry. Shares are up 5.8% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Two Harbors Investment as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, unimpressive growth in net income and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The gross profit margin for TWO HARBORS INVESTMENT CORP is currently very high, coming in at 133.74%. It has increased significantly from the same period last year. Along with this, the net profit margin of 294.88% significantly outperformed against the industry average.
  • 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, TWO HARBORS INVESTMENT CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • TWO HARBORS INVESTMENT CORP 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 two years. We anticipate that this should continue in the coming year. During the past fiscal year, TWO HARBORS INVESTMENT CORP reported lower earnings of $1.11 versus $1.27 in the prior year. For the next year, the market is expecting a contraction of 18.5% in earnings ($0.91 versus $1.11).
  • 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 819.1% when compared to the same quarter one year ago, falling from $26.80 million to -$192.73 million.

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

Home Properties

Dividend Yield: 5.20%

Home Properties (NYSE: HME) shares currently have a dividend yield of 5.20%.

Home Properties, Inc. is an independent real estate investment trust. The firm invests in the real estate markets of the United States. It is engaged in the ownership, management, acquisition, rehabilitation and development of residential apartment communities. The company has a P/E ratio of 33.94.

The average volume for Home Properties has been 414,700 shares per day over the past 30 days. Home Properties has a market cap of $3.2 billion and is part of the real estate industry. Shares are up 7.1% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Home Properties as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, revenue growth and reasonable valuation levels. 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:
  • HOME PROPERTIES INC has improved earnings per share by 22.2% 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, HOME PROPERTIES INC increased its bottom line by earning $1.36 versus $0.81 in the prior year. This year, the market expects an improvement in earnings ($1.54 versus $1.36).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.7%. Since the same quarter one year prior, revenues slightly increased by 3.1%. 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 HOME PROPERTIES INC is currently lower than what is desirable, coming in at 34.64%. Regardless of HME's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, HME's net profit margin of 15.00% is significantly lower than 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 31.2% when compared to the same quarter one year ago, falling from $36.41 million to $25.04 million.

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

Piedmont Office Realty

Dividend Yield: 4.80%

Piedmont Office Realty (NYSE: PDM) shares currently have a dividend yield of 4.80%.

Piedmont Office Realty Trust, Inc. engages in the acquisition and ownership of commercial real estate properties in the United States. Its property portfolio primarily consists of office and industrial buildings, warehouses, and manufacturing facilities. The company has a P/E ratio of 36.69.

The average volume for Piedmont Office Realty has been 1,072,200 shares per day over the past 30 days. Piedmont Office Realty has a market cap of $2.7 billion and is part of the real estate industry. Shares are up 0.1% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Piedmont Office Realty as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.

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 Real Estate Investment Trusts (REITs) industry. The net income increased by 76.3% when compared to the same quarter one year prior, rising from $10.83 million to $19.10 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.7%. Since the same quarter one year prior, revenues slightly increased by 8.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • PIEDMONT OFFICE REALTY TRUST 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, PIEDMONT OFFICE REALTY TRUST reported lower earnings of $0.38 versus $0.49 in the prior year. This year, the market expects an improvement in earnings ($0.43 versus $0.38).
  • PDM has underperformed the S&P 500 Index, declining 14.47% 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.
  • The gross profit margin for PIEDMONT OFFICE REALTY TRUST is rather low; currently it is at 24.41%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 13.21% significantly trails 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.

PG&E

Dividend Yield: 4.40%

PG&E (NYSE: PCG) shares currently have a dividend yield of 4.40%.

PG&E Corporation, through its subsidiary, Pacific Gas and Electric Company (Utility), transmits, delivers, and sells electricity and natural gas to customers primarily in northern and central California. The Utility provides services to approximately 15 million people. The company has a P/E ratio of 25.53.

The average volume for PG&E has been 2,894,400 shares per day over the past 30 days. PG&E has a market cap of $18.5 billion and is part of the utilities industry. Shares are up 2.7% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates PG&E as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels 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 poor profit margins.

Highlights from the ratings report include:
  • PCG's revenue growth has slightly outpaced the industry average of 0.2%. Since the same quarter one year prior, revenues slightly increased by 5.0%. 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 slightly increased to $1,374.00 million or 7.51% when compared to the same quarter last year. Despite an increase in cash flow, PG&E CORP's cash flow growth rate is still lower than the industry average growth rate of 26.07%.
  • 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 Multi-Utilities industry. The net income has significantly decreased by 54.9% when compared to the same quarter one year ago, falling from $364.00 million to $164.00 million.
  • 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 Multi-Utilities industry and the overall market, PG&E CORP's return on equity is below 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.

Weingarten Realty Investors

Dividend Yield: 4.20%

Weingarten Realty Investors (NYSE: WRI) shares currently have a dividend yield of 4.20%.

Weingarten Realty Investors is a publically owned equity real estate investment trust. The firm invests in the real estate markets of United States. The firm engages in ownership, management, acquisition, development and redevelopment. The company has a P/E ratio of 42.91.

The average volume for Weingarten Realty Investors has been 795,200 shares per day over the past 30 days. Weingarten Realty Investors has a market cap of $3.5 billion and is part of the real estate industry. Shares are up 6.5% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Weingarten Realty Investors as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that the stock has experienced relatively poor performance when compared with the S&P 500 during the past year.

Highlights from the ratings report include:
  • WEINGARTEN REALTY INVST 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, WEINGARTEN REALTY INVST turned its bottom line around by earning $0.20 versus -$0.33 in the prior year. This year, the market expects an improvement in earnings ($1.35 versus $0.20).
  • 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 50.3% when compared to the same quarter one year prior, rising from $40.27 million to $60.54 million.
  • 37.09% is the gross profit margin for WEINGARTEN REALTY INVST which we consider to be strong. Regardless of WRI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WRI's net profit margin of 43.98% significantly outperformed against the industry.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, WEINGARTEN REALTY INVST's return on equity is below that of both the industry average and the S&P 500.
  • In its most recent trading session, WRI 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, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.

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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