3 Hold-Rated Dividend Stocks: RNO, MITT, VLCCF

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."

Rhino Resource Partners

Dividend Yield: 15.00%

Rhino Resource Partners (NYSE: RNO) shares currently have a dividend yield of 15.00%.

Rhino Resource Partners LP, together with its subsidiaries, produces, processes, and sells various grades of steam and metallurgical coal from surface and underground mines in the United States.

The average volume for Rhino Resource Partners has been 45,100 shares per day over the past 30 days. Rhino Resource Partners has a market cap of $198.3 million and is part of the metals & mining industry. Shares are up 4.1% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Rhino Resource Partners as a hold. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, unimpressive growth in net income and disappointing return on equity.

Highlights from the ratings report include:
  • RNO's debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that RNO's debt-to-equity ratio is low, the quick ratio, which is currently 0.61, displays a potential problem in covering short-term cash needs.
  • RNO, with its decline in revenue, underperformed when compared the industry average of 3.0%. Since the same quarter one year prior, revenues fell by 14.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • In its most recent trading session, RNO 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.
  • The gross profit margin for RHINO RESOURCE PARTNERS LP is rather low; currently it is at 17.15%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -12.30% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $1.82 million or 90.15% 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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AG Mortgage Investment

Dividend Yield: 13.10%

AG Mortgage Investment (NYSE: MITT) shares currently have a dividend yield of 13.10%.

AG Mortgage Investment Trust, Inc., a real estate investment trust, focuses on investing, acquiring, and managing a portfolio of residential mortgage assets, other real estate-related securities, and financial assets. The company has a P/E ratio of 6.28.

The average volume for AG Mortgage Investment has been 211,400 shares per day over the past 30 days. AG Mortgage Investment has a market cap of $518.9 million and is part of the real estate industry. Shares are up 15.9% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates AG Mortgage Investment as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and compelling growth in net income. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:
  • MITT's very impressive revenue growth greatly exceeded the industry average of 11.6%. Since the same quarter one year prior, revenues leaped by 214.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, AG MORTGAGE INVESTMENT TRUST has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • AG MORTGAGE INVESTMENT TRUST 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, AG MORTGAGE INVESTMENT TRUST swung to a loss, reporting -$1.60 versus $7.34 in the prior year. This year, the market expects an improvement in earnings ($2.45 versus -$1.60).
  • Net operating cash flow has decreased to $25.56 million or 38.84% 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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Knightsbridge Tankers

Dividend Yield: 8.70%

Knightsbridge Tankers (NASDAQ: VLCCF) shares currently have a dividend yield of 8.70%.

Knightsbridge Tankers Limited, a shipping company, is engaged in the seaborne transportation of dry bulk cargoes worldwide. As of May 09, 2014, it owned and operated a fleet of five Capesize dry bulk carriers. The company was founded in 1996 and is based in Hamilton, Bermuda. The company has a P/E ratio of 65.36.

The average volume for Knightsbridge Tankers has been 649,000 shares per day over the past 30 days. Knightsbridge Tankers has a market cap of $449.5 million and is part of the transportation industry. Shares are down 2.6% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Knightsbridge Tankers as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. 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:
  • VLCCF's very impressive revenue growth greatly exceeded the industry average of 10.7%. Since the same quarter one year prior, revenues leaped by 168.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • VLCCF's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • KNIGHTSBRIDGE TANKERS LTD 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, KNIGHTSBRIDGE TANKERS LTD reported lower earnings of $0.11 versus $0.25 in the prior year. This year, the market expects an improvement in earnings ($0.25 versus $0.11).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Marine industry and the overall market on the basis of return on equity, KNIGHTSBRIDGE TANKERS LTD underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • VLCCF has underperformed the S&P 500 Index, declining 15.89% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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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