3 Hold-Rated Dividend Stocks: BGCP, MEMP, CIM

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."

BGC Partners

Dividend Yield: 6.30%

BGC Partners (NASDAQ: BGCP) shares currently have a dividend yield of 6.30%.

BGC Partners, Inc. operates as a brokerage company, primarily servicing the wholesale financial and commercial real estate markets. It operates through two segments, Financial Services and Real Estate Services. The company has a P/E ratio of 40.26.

The average volume for BGC Partners has been 1,166,900 shares per day over the past 30 days. BGC Partners has a market cap of $1.4 billion and is part of the financial services industry. Shares are up 25.3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates BGC Partners as a hold. Among the primary strengths of the company is its solid stock price performance. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • BGC PARTNERS 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, BGC PARTNERS INC increased its bottom line by earning $0.35 versus $0.16 in the prior year. This year, the market expects an improvement in earnings ($0.57 versus $0.35).
  • BGCP, with its decline in revenue, slightly underperformed the industry average of 2.8%. Since the same quarter one year prior, revenues slightly dropped by 9.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Compared to its closing price of one year ago, BGCP's share price has jumped by 31.43%, exceeding the performance of the broader market during that same time frame. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • 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 Capital Markets industry and the overall market, BGC PARTNERS INC's return on equity is below 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 Capital Markets industry. The net income has significantly decreased by 77.9% when compared to the same quarter one year ago, falling from $34.47 million to $7.60 million.

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Memorial Production Partners

Dividend Yield: 9.30%

Memorial Production Partners (NASDAQ: MEMP) shares currently have a dividend yield of 9.30%.

Memorial Production Partners LP, through its subsidiary, is engaged in the acquisition, development, exploitation, and production of oil and natural gas properties.

The average volume for Memorial Production Partners has been 532,600 shares per day over the past 30 days. Memorial Production Partners has a market cap of $1.6 billion and is part of the energy industry. Shares are up 7.5% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Memorial Production Partners as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 2.4%. Since the same quarter one year prior, revenues rose by 36.7%. 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 significantly increased by 55.81% to $48.03 million when compared to the same quarter last year. In addition, MEMORIAL PRODUCTION PRTRS LP has also vastly surpassed the industry average cash flow growth rate of -6.15%.
  • 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. 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.
  • The debt-to-equity ratio is very high at 3.16 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.44, which clearly demonstrates the inability to cover short-term cash needs.
  • 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MEMORIAL PRODUCTION PRTRS LP's return on equity significantly trails that of both the industry average and the S&P 500.

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Chimera Investment

Dividend Yield: 11.00%

Chimera Investment (NYSE: CIM) shares currently have a dividend yield of 11.00%.

Chimera Investment Corporation operates as a real estate investment trust (REIT) in the United States. The company has a P/E ratio of 9.94.

The average volume for Chimera Investment has been 5,401,900 shares per day over the past 30 days. Chimera Investment has a market cap of $3.4 billion and is part of the real estate industry. Shares are up 6.5% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Chimera Investment 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 deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • The gross profit margin for CHIMERA INVESTMENT CORP is currently very high, coming in at 88.31%. Regardless of CIM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CIM's net profit margin of 77.16% significantly outperformed against the industry.
  • 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. 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.
  • 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 26.8% when compared to the same quarter one year ago, falling from $143.21 million to $104.77 million.
  • Net operating cash flow has significantly decreased to -$29.80 million or 142.78% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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