3 Hold-Rated Dividend Stocks: ATLS, HLSS, BGCP

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."

Atlas Energy

Dividend Yield: 4.40%

Atlas Energy (NYSE: ATLS) shares currently have a dividend yield of 4.40%.

Atlas Energy, L.P. develops and produces natural gas, crude oil, and natural gas liquids (NGLs) in basins across the United States. It also sponsors and manages tax-advantaged investment partnerships.

The average volume for Atlas Energy has been 431,400 shares per day over the past 30 days. Atlas Energy has a market cap of $2.3 billion and is part of the energy industry. Shares are down 5.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Atlas Energy as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth and good cash flow from operations. 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 3.5%. Since the same quarter one year prior, revenues rose by 32.5%. 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.
  • Net operating cash flow has significantly increased by 121.89% to $13.67 million when compared to the same quarter last year. In addition, ATLAS ENERGY LP has also vastly surpassed the industry average cash flow growth rate of -5.36%.
  • ATLAS ENERGY LP's earnings per share declined by 18.8% 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ATLAS ENERGY LP reported poor results of -$1.48 versus -$1.02 in the prior year. This year, the market expects an improvement in earnings (-$1.05 versus -$1.48).
  • 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, ATLAS ENERGY LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ATLAS ENERGY LP is rather low; currently it is at 21.11%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.17% trails that of the industry average.

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Home Loan Servicing Solutions

Dividend Yield: 9.80%

Home Loan Servicing Solutions (NASDAQ: HLSS) shares currently have a dividend yield of 9.80%.

Home Loan Servicing Solutions, Ltd., through its subsidiaries, engages in the acquisition of mortgage servicing assets. Its mortgage servicing assets consists of servicing advances, mortgage servicing rights, rights to mortgage servicing rights, and other related assets. The company has a P/E ratio of 10.06.

The average volume for Home Loan Servicing Solutions has been 641,600 shares per day over the past 30 days. Home Loan Servicing Solutions has a market cap of $1.6 billion and is part of the real estate industry. Shares are down 3.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Home Loan Servicing Solutions 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 expanding profit margins. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 12.8%. Since the same quarter one year prior, revenues rose by 43.2%. 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 net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Thrifts & Mortgage Finance industry average. The net income increased by 15.6% when compared to the same quarter one year prior, going from $43.83 million to $50.66 million.
  • Net operating cash flow has increased to $268.47 million or 17.67% when compared to the same quarter last year. Despite an increase in cash flow of 17.67%, HOME LOAN SERVICING SOLTNS is still growing at a significantly lower rate than the industry average of 118.47%.
  • HOME LOAN SERVICING SOLTNS's earnings per share declined by 6.6% 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, HOME LOAN SERVICING SOLTNS increased its bottom line by earning $2.16 versus $1.23 in the prior year. This year, the market expects an improvement in earnings ($2.52 versus $2.16).
  • In its most recent trading session, HLSS 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. 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.

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

BGC Partners

Dividend Yield: 6.40%

BGC Partners (NASDAQ: BGCP) shares currently have a dividend yield of 6.40%.

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 39.32.

The average volume for BGC Partners has been 1,137,900 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 24.1% year-to-date as of the close of trading on Thursday.

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 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 3.0%. 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 34.47%, 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.

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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