What To Hold: 3 Hold-Rated Dividend Stocks ATAX, IRET, SSW

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: 9.00%

America First Multifamily Investors (NASDAQ: ATAX) shares currently have a dividend yield of 9.00%.

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 22.20.

The average volume for America First Multifamily Investors has been 107,700 shares per day over the past 30 days. America First Multifamily Investors has a market cap of $334.4 million and is part of the real estate industry. Shares are up 5.5% year-to-date as of the close of trading on Thursday.

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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 a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 8.1%. 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 -184.63%.
  • 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'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.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, ATAX has underperformed the S&P 500 Index, declining 7.62% from its price level of one year ago. 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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Investors Real Estate

Dividend Yield: 7.10%

Investors Real Estate (NYSE: IRET) shares currently have a dividend yield of 7.10%.

Investors Real Estate Trust is a real estate investment trust. The trust invests in real estate markets of United States. It is primarily engaged in investment and operation of the the real estate assets.

The average volume for Investors Real Estate has been 475,500 shares per day over the past 30 days. Investors Real Estate has a market cap of $898.7 million and is part of the real estate industry. Shares are down 10.3% year-to-date as of the close of trading on Thursday.

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

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 139.0% when compared to the same quarter one year prior, rising from $3.50 million to $8.37 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.4%. Since the same quarter one year prior, revenues slightly increased by 6.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • INVESTORS REAL ESTATE TRUST has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. 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, INVESTORS REAL ESTATE TRUST swung to a loss, reporting -$0.28 versus $0.09 in the prior year. This year, the market expects an improvement in earnings ($0.08 versus -$0.28).
  • The gross profit margin for INVESTORS REAL ESTATE TRUST is currently lower than what is desirable, coming in at 30.93%. Regardless of IRET's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, IRET's net profit margin of 11.39% is significantly lower than the industry average.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, INVESTORS REAL ESTATE TRUST's return on equity significantly trails that of both the industry average and the S&P 500.

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Seaspan

Dividend Yield: 7.50%

Seaspan (NYSE: SSW) shares currently have a dividend yield of 7.50%.

Seaspan Corporation operates as an independent charter owner and manager of containerships in Hong Kong. The company charters its containerships pursuant to long-term, fixed-rate time charters to various container liner companies. As of February 28, 2015, it operated a fleet of 77 vessels. The company has a P/E ratio of 15.53.

The average volume for Seaspan has been 192,800 shares per day over the past 30 days. Seaspan has a market cap of $1.9 billion and is part of the transportation industry. Shares are up 10.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Seaspan as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and growth in earnings per share. 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 weak operating cash flow.

Highlights from the ratings report include:
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Marine industry average. The net income increased by 18.3% when compared to the same quarter one year prior, going from $18.03 million to $21.33 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 16.2%. Since the same quarter one year prior, revenues rose by 12.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • SEASPAN CORP 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, SEASPAN CORP reported lower earnings of $0.78 versus $2.94 in the prior year. This year, the market expects an improvement in earnings ($1.13 versus $0.78).
  • 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. When compared to other companies in the Marine industry and the overall market, SEASPAN CORP's return on equity is below that of both the industry average and the S&P 500.
  • SSW has underperformed the S&P 500 Index, declining 9.96% from its price level of one year ago. 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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