What To Hold: 3 Hold-Rated Dividend Stocks ATAX, FLY, BDCV

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."

America First Multifamily Investors

Dividend Yield: 8.30%

America First Multifamily Investors (NASDAQ: ATAX) shares currently have a dividend yield of 8.30%.

America First Multifamily Investors, L.P. acquires, holds, sells, and deals in a portfolio of mortgage revenue bonds that have been issued to provide construction and/or permanent financing of multifamily residential apartments. The company has a P/E ratio of 25.21.

The average volume for America First Multifamily Investors has been 89,200 shares per day over the past 30 days. America First Multifamily Investors has a market cap of $364.5 million and is part of the real estate industry. Shares are down 4.6% year-to-date as of the close of trading on Friday.

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

Highlights from the ratings report include:
  • The gross profit margin for AMERICA FIRST MULTIFAMILY-LP is currently very high, coming in at 79.83%. Regardless of ATAX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ATAX's net profit margin of 32.50% significantly outperformed against the industry.
  • Net operating cash flow has significantly increased by 60.36% to $4.59 million when compared to the same quarter last year. Despite an increase in cash flow of 60.36%, AMERICA FIRST MULTIFAMILY-LP is still growing at a significantly lower rate than the industry average of 118.78%.
  • 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 Thrifts & Mortgage Finance industry average. The net income has decreased by 7.5% when compared to the same quarter one year ago, dropping from $3.96 million to $3.66 million.
  • The share price of AMERICA FIRST MULTIFAMILY-LP has not done very well: it is down 14.43% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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Fly Leasing

Dividend Yield: 7.30%

Fly Leasing (NYSE: FLY) shares currently have a dividend yield of 7.30%.

FLY Leasing Limited, together with its subsidiaries, is engaged in purchasing and leasing commercial aircraft under multi-year contracts to various airlines worldwide. As of September 2, 2014, it operated a fleet of 122 commercial jet aircraft. The company has a P/E ratio of 42.62.

The average volume for Fly Leasing has been 136,700 shares per day over the past 30 days. Fly Leasing has a market cap of $565.1 million and is part of the diversified services industry. Shares are down 15.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Fly Leasing as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • FLY's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 1.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is very high at 3.26 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • 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. In comparison to the other companies in the Trading Companies & Distributors industry and the overall market, FLY LEASING LTD -ADR's return on equity is significantly below that of the industry average and is below that of 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.

BDCA Venture

Dividend Yield: 7.10%

BDCA Venture (NASDAQ: BDCV) shares currently have a dividend yield of 7.10%.

Keating Capital, Inc. is a business development company specializing in later stage, emerging growth, growth capital, pre-IPO and secondary purchase investments. It seeks to invest in micro-cap and small-cap private companies that are committed to and capable of becoming public. The company has a P/E ratio of 15.72.

The average volume for BDCA Venture has been 16,400 shares per day over the past 30 days. BDCA Venture has a market cap of $55.4 million and is part of the financial services industry. Shares are down 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 BDCA Venture 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 notable return on equity. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • BDCV's very impressive revenue growth greatly exceeded the industry average of 2.5%. Since the same quarter one year prior, revenues leaped by 2600.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • BDCA VENTURE INC has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, BDCA VENTURE INC turned its bottom line around by earning $0.26 versus -$0.21 in the prior year. This year, the market expects an improvement in earnings ($0.30 versus $0.26).
  • This stock's share value has moved by only 24.40% over the past year. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • Net operating cash flow has significantly decreased to -$5.05 million or 568.51% 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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