3 Hold-Rated Dividend Stocks: NLY, NSH, RESI

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."

Annaly Capital Management

Dividend Yield: 10.20%

Annaly Capital Management (NYSE: NLY) shares currently have a dividend yield of 10.20%.

Annaly Capital Management, Inc. owns a portfolio of real estate related investments in the United States. The company has a P/E ratio of 18.97.

The average volume for Annaly Capital Management has been 7,032,400 shares per day over the past 30 days. Annaly Capital Management has a market cap of $11.1 billion and is part of the real estate industry. Shares are up 17.6% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Annaly Capital Management as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The gross profit margin for ANNALY CAPITAL MANAGEMENT is currently very high, coming in at 92.07%. Regardless of NLY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NLY's net profit margin of -50.97% significantly underperformed when compared to 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 120.5% when compared to the same quarter one year ago, falling from $1,638.21 million to -$335.51 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, ANNALY CAPITAL MANAGEMENT's return on equity is below that of both the industry average and the S&P 500.

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NuStar GP Holdings

Dividend Yield: 5.10%

NuStar GP Holdings (NYSE: NSH) shares currently have a dividend yield of 5.10%.

NuStar GP Holdings, LLC, through its ownership interests in NuStar Energy L.P., is engaged in the terminalling and storage of petroleum products; transportation of petroleum products and anhydrous ammonia; and marketing of petroleum products.

The average volume for NuStar GP Holdings has been 200,800 shares per day over the past 30 days. NuStar GP Holdings has a market cap of $1.8 billion and is part of the energy industry. Shares are up 51.1% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates NuStar GP Holdings as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and increase in net income. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 2.6%. Since the same quarter one year prior, revenues rose by 24.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Powered by its strong earnings growth of 27.58% and other important driving factors, this stock has surged by 79.15% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although NSH had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Oil, Gas & Consumable Fuels industry average. The net income increased by 25.6% when compared to the same quarter one year prior, rising from $12.56 million to $15.77 million.
  • The gross profit margin for NUSTAR GP HOLDINGS LLC is currently very high, coming in at 100.00%. NSH has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, NSH's net profit margin of 94.19% significantly outperformed against the industry.
  • NUSTAR GP HOLDINGS LLC has improved earnings per share by 27.6% 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, NUSTAR GP HOLDINGS LLC swung to a loss, reporting -$0.26 versus $0.05 in the prior year. This year, the market expects an improvement in earnings ($1.49 versus -$0.26).

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

Altisource Residential Corporation

Dividend Yield: 7.60%

Altisource Residential Corporation (NYSE: RESI) shares currently have a dividend yield of 7.60%.

Altisource Residential Corporation, through its wholly-owned subsidiary, Altisource Residential, L.P., focuses on acquiring, owning, and managing single-family rental properties in the United States. The company has a P/E ratio of 7.20.

The average volume for Altisource Residential Corporation has been 567,900 shares per day over the past 30 days. Altisource Residential Corporation has a market cap of $1.4 billion and is part of the real estate industry. Shares are down 20.5% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Altisource Residential Corporation as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:
  • RESI's very impressive revenue growth greatly exceeded the industry average of 10.1%. Since the same quarter one year prior, revenues leaped by 1206.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, ALTISOURCE RESIDENTIAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • The gross profit margin for ALTISOURCE RESIDENTIAL CORP is rather high; currently it is at 62.57%. Regardless of RESI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, RESI's net profit margin of 58.41% significantly outperformed against the industry.
  • Net operating cash flow has significantly decreased to -$20.98 million or 547.23% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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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