3 Hold-Rated Dividend Stocks: CTL, STAG, OFC

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 which could 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 3 stocks with substantial yields, that ultimately, we have rated "Hold."

CenturyLink

Dividend Yield: 5.70%

CenturyLink (NYSE: CTL) shares currently have a dividend yield of 5.70%.

CenturyLink, Inc. operates as an integrated telecommunications company in the United States. The company operates through four segments: Consumer, Business, Wholesale, and Data Hosting.

The average volume for CenturyLink has been 5,481,100 shares per day over the past 30 days. CenturyLink has a market cap of $21.5 billion and is part of the telecommunications industry. Shares are up 16.7% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates CenturyLink as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 1.3%. Since the same quarter one year prior, revenues slightly increased by 0.6%. 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.
  • The gross profit margin for CENTURYLINK INC is rather high; currently it is at 57.45%. Regardless of CTL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.47% trails the industry average.
  • CENTURYLINK INC's earnings per share declined by 27.1% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CENTURYLINK INC swung to a loss, reporting -$0.43 versus $1.24 in the prior year. This year, the market expects an improvement in earnings ($2.60 versus -$0.43).
  • 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 Diversified Telecommunication Services industry and the overall market, CENTURYLINK INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 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 Telecommunication Services industry. The net income has significantly decreased by 31.9% when compared to the same quarter one year ago, falling from $298.00 million to $203.00 million.

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Stag Industrial

Dividend Yield: 5.60%

Stag Industrial (NYSE: STAG) shares currently have a dividend yield of 5.60%.

STAG Industrial, Inc. is a real estate investment trust. The firm invests in the real estate markets of United States. It is engaged in investment and management of real estate assets. STAG Industrial, Inc. was founded on July 21, 2010 and is based in Boston, Massachusetts.

The average volume for Stag Industrial has been 404,300 shares per day over the past 30 days. Stag Industrial has a market cap of $1.3 billion and is part of the real estate industry. Shares are up 15.2% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Stag Industrial 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 increase in stock price during the past year. 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:
  • The revenue growth came in higher than the industry average of 10.1%. Since the same quarter one year prior, revenues rose by 31.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant 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 Real Estate Investment Trusts (REITs) industry. The net income increased by 353.3% when compared to the same quarter one year prior, rising from -$0.15 million to $0.39 million.
  • STAG INDUSTRIAL INC reported flat earnings per share in the most recent quarter. 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, STAG INDUSTRIAL INC continued to lose money by earning -$0.21 versus -$0.45 in the prior year. This year, the market expects an improvement in earnings (-$0.02 versus -$0.21).
  • 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, STAG INDUSTRIAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for STAG INDUSTRIAL INC is currently extremely low, coming in at 14.18%. Regardless of STAG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, STAG's net profit margin of 0.96% is significantly lower than 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: 4.10%

Corporate Office Properties (NYSE: OFC) shares currently have a dividend yield of 4.10%.

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 225.42.

The average volume for Corporate Office Properties has been 565,800 shares per day over the past 30 days. Corporate Office Properties has a market cap of $2.4 billion and is part of the real estate industry. Shares are up 13.9% 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 revenue growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and poor profit margins.

Highlights from the ratings report include:
  • OFC's revenue growth has slightly outpaced the industry average of 10.1%. Since the same quarter one year prior, revenues rose by 12.5%. 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.
  • CORP OFFICE PPTYS TR INC 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. 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, CORP OFFICE PPTYS TR INC turned its bottom line around by earning $0.21 versus -$0.21 in the prior year. This year, the market expects an improvement in earnings ($0.91 versus $0.21).
  • 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. 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 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 68.4% when compared to the same quarter one year ago, falling from $15.02 million to $4.74 million.
  • The share price of CORP OFFICE PPTYS TR INC has not done very well: it is down 6.97% 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, 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.

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