What To Hold: 3 Hold-Rated Dividend Stocks LINE, LPT, SQM

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."

Linn Energy

Dividend Yield: 9.10%

Linn Energy (NASDAQ: LINE) shares currently have a dividend yield of 9.10%.

Linn Energy, LLC, an independent oil and natural gas company, acquires and develops oil and natural gas properties. The company's properties are located in Rockies, the Mid-Continent, the Hugoton Basin, California, the Permian Basin, Michigan, Illinois, and East Texas in the United States.

The average volume for Linn Energy has been 1,180,300 shares per day over the past 30 days. Linn Energy has a market cap of $10.5 billion and is part of the energy industry. Shares are up 3% year-to-date as of the close of trading on Friday.

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

TheStreet Ratings rates Linn Energy as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, 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:
  • Compared to its closing price of one year ago, LINE's share price has jumped by 28.52%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • Net operating cash flow has significantly increased by 112.18% to $481.15 million when compared to the same quarter last year. In addition, LINN ENERGY LLC has also vastly surpassed the industry average cash flow growth rate of -5.36%.
  • 46.13% is the gross profit margin for LINN ENERGY LLC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, LINE's net profit margin of -34.82% significantly underperformed when compared to the industry average.
  • Currently the debt-to-equity ratio of 1.87 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, LINE has a quick ratio of 0.56, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, LINN ENERGY LLC'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.

Liberty Property

Dividend Yield: 5.40%

Liberty Property (NYSE: LPT) shares currently have a dividend yield of 5.40%.

Liberty Property Trust is a publicly owned real estate investment holding trust. Through its subsidiary, it provides leasing, property management, development, acquisition, and other tenant-related services for a portfolio of industrial and office properties. The company has a P/E ratio of 54.49.

The average volume for Liberty Property has been 940,400 shares per day over the past 30 days. Liberty Property has a market cap of $5.2 billion and is part of the real estate industry. Shares are up 4.6% year-to-date as of the close of trading on Friday.

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

TheStreet Ratings rates Liberty Property as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 10.6%. Since the same quarter one year prior, revenues rose by 25.1%. 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 company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness 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, LIBERTY PROPERTY TRUST underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for LIBERTY PROPERTY TRUST is currently lower than what is desirable, coming in at 33.97%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 14.80% 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.

Sociedad Quimica Y Minera De Chile

Dividend Yield: 5.00%

Sociedad Quimica Y Minera De Chile (NYSE: SQM) shares currently have a dividend yield of 5.00%.

Chemical and Mining Company of Chile Inc. is engaged in the production and distribution of specialty plant nutrients, iodine and its derivatives, lithium and its derivatives, potassium chloride and potassium sulfate, industrial chemicals, and other commodity fertilizers. The company has a P/E ratio of 15.47.

The average volume for Sociedad Quimica Y Minera De Chile has been 360,500 shares per day over the past 30 days. Sociedad Quimica Y Minera De Chile has a market cap of $7.2 billion and is part of the chemicals industry. Shares are up 5.8% year-to-date as of the close of trading on Friday.

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

TheStreet Ratings rates Sociedad Quimica Y Minera De Chile as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The current debt-to-equity ratio, 0.57, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 2.58, which clearly demonstrates the ability to cover short-term cash needs.
  • 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.
  • 38.71% is the gross profit margin for SOC QUIMICA Y MINERA DE CHI which we consider to be strong. Regardless of SQM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SQM's net profit margin of 13.61% compares favorably to the industry average.
  • SOC QUIMICA Y MINERA DE CHI's earnings per share declined by 34.1% in the most recent quarter compared to 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, SOC QUIMICA Y MINERA DE CHI reported lower earnings of $1.78 versus $2.47 in the prior year. For the next year, the market is expecting a contraction of 32.2% in earnings ($1.21 versus $1.78).
  • 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 Chemicals industry. The net income has significantly decreased by 33.8% when compared to the same quarter one year ago, falling from $107.43 million to $71.10 million.

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

Other helpful dividend tools from TheStreet:

null

More from Markets

Oil Prices Slide as Saudi Energy Minister Suggests OPEC Output Deal Imminent

Oil Prices Slide as Saudi Energy Minister Suggests OPEC Output Deal Imminent

Daimler Slumps After Profit Warning Cites 'Import Tariffs' in US-China Trade War

Daimler Slumps After Profit Warning Cites 'Import Tariffs' in US-China Trade War

Global Stocks Mixed, Dollar Firm as Trade Tensions Keep Investors Cautious

Global Stocks Mixed, Dollar Firm as Trade Tensions Keep Investors Cautious

FTC Chair Says Agency Is Ready to Take on Big Tech; Walgreens Joins Dow -- ICYMI

FTC Chair Says Agency Is Ready to Take on Big Tech; Walgreens Joins Dow -- ICYMI

Dow Gets Swept Into Nasty Reversal Even as Nasdaq Posts New Record

Dow Gets Swept Into Nasty Reversal Even as Nasdaq Posts New Record