3 Hold-Rated Dividend Stocks: FISH, EFC, CTCM

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."

Marlin Midstream Partners

Dividend Yield: 8.30%

Marlin Midstream Partners (NASDAQ: FISH) shares currently have a dividend yield of 8.30%.

Marlin Midstream Partners, LP, together with its subsidiaries, acquires, owns, develops, and operates midstream energy assets in the United States. The company operates through two segments, Midstream Natural Gas and Crude Oil Logistics. The company has a P/E ratio of 26.15.

The average volume for Marlin Midstream Partners has been 45,400 shares per day over the past 30 days. Marlin Midstream Partners has a market cap of $157.3 million and is part of the energy industry. Shares are up 4.3% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Marlin Midstream Partners as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the company's revenue growth has not been good.

Highlights from the ratings report include:
  • MARLIN MIDSTREAM PARTNERS LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($1.32 versus $0.36).
  • 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 219.4% when compared to the same quarter one year prior, rising from $1.92 million to $6.14 million.
  • 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. 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.
  • When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MARLIN MIDSTREAM PARTNERS LP's return on equity is below that of both the industry average and the S&P 500.
  • FISH, with its decline in revenue, slightly underperformed the industry average of 6.7%. Since the same quarter one year prior, revenues slightly dropped by 9.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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Ellington Financial

Dividend Yield: 14.10%

Ellington Financial (NYSE: EFC) shares currently have a dividend yield of 14.10%.

Ellington Financial LLC, a specialty finance company, acquires and manages mortgage-related assets, including residential mortgage backed securities backed by prime jumbo, Alt-A, manufactured housing and subprime residential mortgage loans, and residential mortgage-backed securities. The company has a P/E ratio of 8.16.

The average volume for Ellington Financial has been 374,800 shares per day over the past 30 days. Ellington Financial has a market cap of $731.0 million and is part of the real estate industry. Shares are down 4.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Ellington Financial as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • EFC's revenue growth has slightly outpaced the industry average of 1.0%. Since the same quarter one year prior, revenues slightly increased by 3.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for ELLINGTON FINANCIAL LLC is currently very high, coming in at 73.45%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 99.76% significantly outperformed against the industry average.
  • EFC has underperformed the S&P 500 Index, declining 5.97% from its price level of one year ago. 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.
  • 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 on the basis of return on equity, ELLINGTON FINANCIAL LLC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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CTC Media

Dividend Yield: 11.40%

CTC Media (NASDAQ: CTCM) shares currently have a dividend yield of 11.40%.

CTC Media, Inc., together with its subsidiaries, operates as an independent media company in Russia and other CIS markets. The company has a P/E ratio of 7.15.

The average volume for CTC Media has been 1,097,700 shares per day over the past 30 days. CTC Media has a market cap of $957.9 million and is part of the media industry. Shares are down 55.7% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates CTC Media 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, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • CTCM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.01, which illustrates the ability to avoid short-term cash problems.
  • CTCM, with its decline in revenue, underperformed when compared the industry average of 9.4%. Since the same quarter one year prior, revenues slightly dropped by 7.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 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 Media industry. The net income has significantly decreased by 32.3% when compared to the same quarter one year ago, falling from $46.66 million to $31.60 million.
  • Net operating cash flow has significantly decreased to $4.99 million or 68.04% 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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