What To Hold: 3 Hold-Rated Dividend Stocks OAK, PM, CMLP

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."

Oaktree Capital Group

Dividend Yield: 4.40%

Oaktree Capital Group (NYSE: OAK) shares currently have a dividend yield of 4.40%.

Oaktree Capital Group, LLC operates as a global investment management firm that focuses on alternative markets. The company has a P/E ratio of 10.69.

The average volume for Oaktree Capital Group has been 255,800 shares per day over the past 30 days. Oaktree Capital Group has a market cap of $2.2 billion and is part of the financial services industry. Shares are down 13.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Oaktree Capital Group as a hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • 37.19% is the gross profit margin for OAKTREE CAPITAL GROUP 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, the net profit margin of 9.17% trails the industry average.
  • The revenue fell significantly faster than the industry average of 3.0%. Since the same quarter one year prior, revenues fell by 46.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 Capital Markets industry and the overall market, OAKTREE CAPITAL GROUP LLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$1,441.17 million or 165.01% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 44.9% when compared to the same quarter one year ago, falling from $56.58 million to $31.19 million.

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Philip Morris International

Dividend Yield: 4.80%

Philip Morris International (NYSE: PM) shares currently have a dividend yield of 4.80%.

Philip Morris International Inc., through its subsidiaries, manufactures and sells cigarettes and other tobacco products. The company's portfolio of brands include Marlboro, Merit, Parliament, Virginia Slims, L&M, Chesterfield, Bond Street, Lark, Muratti, Next, Philip Morris, and Red & White. The company has a P/E ratio of 16.74.

The average volume for Philip Morris International has been 4,265,000 shares per day over the past 30 days. Philip Morris International has a market cap of $131.5 billion and is part of the tobacco industry. Shares are down 3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Philip Morris International as a hold. The company's strengths can be seen in multiple areas, such as its 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, weak operating cash flow and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The gross profit margin for PHILIP MORRIS INTERNATIONAL is rather high; currently it is at 67.91%. Regardless of PM'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 23.73% trails the industry average.
  • PM, with its decline in revenue, slightly underperformed the industry average of 0.5%. Since the same quarter one year prior, revenues slightly dropped by 1.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • In its most recent trading session, PM 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. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • Net operating cash flow has decreased to $2,705.00 million or 13.77% when compared to the same quarter last year. Despite a decrease in cash flow PHILIP MORRIS INTERNATIONAL is still fairing well by exceeding its industry average cash flow growth rate of -30.74%.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Tobacco industry average. The net income has decreased by 12.9% when compared to the same quarter one year ago, dropping from $2,124.00 million to $1,851.00 million.

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Crestwood Midstream Partners

Dividend Yield: 7.10%

Crestwood Midstream Partners (NYSE: CMLP) shares currently have a dividend yield of 7.10%.

Crestwood Midstream Partners LP is engaged in the gathering, processing, treating, compression, storage, and transportation of natural gas; storage and transportation of natural gas liquids (NGLs); and gathering, storage, and terminalling of crude oil in the United States.

The average volume for Crestwood Midstream Partners has been 696,200 shares per day over the past 30 days. Crestwood Midstream Partners has a market cap of $4.4 billion and is part of the energy industry. Shares are down 7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Crestwood Midstream Partners as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • CMLP's very impressive revenue growth greatly exceeded the industry average of 3.5%. Since the same quarter one year prior, revenues leaped by 850.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the 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 Oil, Gas & Consumable Fuels industry. The net income increased by 64.3% when compared to the same quarter one year prior, rising from $4.87 million to $8.00 million.
  • CRESTWOOD MIDSTREAM PTNRS LP reported significant earnings per share improvement 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, CRESTWOOD MIDSTREAM PTNRS LP swung to a loss, reporting -$0.38 versus $0.35 in the prior year. This year, the market expects an improvement in earnings ($0.21 versus -$0.38).
  • 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, CRESTWOOD MIDSTREAM PTNRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CRESTWOOD MIDSTREAM PTNRS LP is rather low; currently it is at 15.18%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 1.18% trails that of 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.

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