What To Hold: 3 Hold-Rated Dividend Stocks ATAX, RSO, 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

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: 9.10%

America First Multifamily Investors (NASDAQ: ATAX) shares currently have a dividend yield of 9.10%.

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 22.04.

The average volume for America First Multifamily Investors has been 114,400 shares per day over the past 30 days. America First Multifamily Investors has a market cap of $332.0 million and is part of the real estate industry. Shares are up 5.3% 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 revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 6.0%. Since the same quarter one year prior, revenues rose by 32.8%. 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 82.62% to $6.51 million when compared to the same quarter last year. In addition, AMERICA FIRST MULTIFAMILY-LP has also vastly surpassed the industry average cash flow growth rate of -121.56%.
  • The gross profit margin for AMERICA FIRST MULTIFAMILY-LP is currently very high, coming in at 77.72%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 16.13% trails the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Thrifts & Mortgage Finance industry average, but is greater than that of the S&P 500. The net income has decreased by 0.3% when compared to the same quarter one year ago, dropping from $2.03 million to $2.02 million.
  • 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 Thrifts & Mortgage Finance industry and the overall market, AMERICA FIRST MULTIFAMILY-LP's return on equity is below that of both the industry average and the S&P 500.

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Resource Capital

Dividend Yield: 14.30%

Resource Capital (NYSE: RSO) shares currently have a dividend yield of 14.30%.

Resource Capital Corp., a diversified real estate investment trust, primarily focuses on originating, holding, and managing commercial mortgage loans and other commercial real estate-related debt and equity investments in the United States. The company has a P/E ratio of 13.21.

The average volume for Resource Capital has been 750,900 shares per day over the past 30 days. Resource Capital has a market cap of $602.0 million and is part of the real estate industry. Shares are down 10.9% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Resource Capital as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 996.0% when compared to the same quarter one year prior, rising from $1.17 million to $12.78 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.0%. Since the same quarter one year prior, revenues slightly increased by 7.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for RESOURCE CAPITAL CORP is rather high; currently it is at 52.51%. Regardless of RSO'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 28.34% trails the industry average.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, RESOURCE CAPITAL CORP's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$59.73 million or 3859.03% 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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CTC Media

Dividend Yield: 16.90%

CTC Media (NASDAQ: CTCM) shares currently have a dividend yield of 16.90%.

CTC Media, Inc., together with its subsidiaries, operates as an independent media company in the Russian Federation and internationally. The company has a P/E ratio of 5.99.

The average volume for CTC Media has been 577,700 shares per day over the past 30 days. CTC Media has a market cap of $643.3 million and is part of the media industry. Shares are down 15.2% year-to-date as of the close of trading on Friday.

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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 notable return on equity, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:
  • 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 Media industry and the overall market, CTC MEDIA INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • CTCM's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.98 is somewhat weak and could be cause for future problems.
  • 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 59.1% when compared to the same quarter one year ago, falling from $45.50 million to $18.62 million.
  • Net operating cash flow has significantly decreased to $50.37 million or 58.73% 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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