3 Hold-Rated Dividend Stocks: TEP, CM, GEF

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."

Tallgrass Energy Partners

Dividend Yield: 4.30%

Tallgrass Energy Partners (NYSE: TEP) shares currently have a dividend yield of 4.30%.

Tallgrass Energy Partners, LP acquires, owns, develops, and operates various midstream energy assets in North America. The company operates through three segments: Natural Gas Transportation & Logistics; Crude Oil Transportation & Logistics; and Processing & Logistics. The company has a P/E ratio of 35.92.

The average volume for Tallgrass Energy Partners has been 323,400 shares per day over the past 30 days. Tallgrass Energy Partners has a market cap of $2.4 billion and is part of the energy industry. Shares are up 9.3% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Tallgrass Energy Partners 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 impressive record of earnings per share growth. 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:
  • The revenue growth greatly exceeded the industry average of 37.8%. Since the same quarter one year prior, revenues rose by 26.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.54, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.21, which illustrates the ability to avoid short-term cash problems.
  • Powered by its strong earnings growth of 60.60% and other important driving factors, this stock has surged by 33.76% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TALLGRASS ENERGY PRT LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has declined marginally to $32.20 million or 1.64% when compared to the same quarter last year. Despite a decrease in cash flow TALLGRASS ENERGY PRT LP is still fairing well by exceeding its industry average cash flow growth rate of -51.31%.

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Canadian Imperial Bank of Commerce

Dividend Yield: 4.30%

Canadian Imperial Bank of Commerce (NYSE: CM) shares currently have a dividend yield of 4.30%.

Canadian Imperial Bank of Commerce, a diversified financial institution, provides various financial products and services to individuals and small businesses, and commercial, corporate, and institutional clients in Canada and internationally. The company has a P/E ratio of 12.21.

The average volume for Canadian Imperial Bank of Commerce has been 324,200 shares per day over the past 30 days. Canadian Imperial Bank of Commerce has a market cap of $31.1 billion and is part of the banking industry. Shares are down 8.9% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Canadian Imperial Bank of Commerce as a hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and notable return on equity. 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 a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 151.63% to $2,683.00 million when compared to the same quarter last year. In addition, CANADIAN IMPERIAL BANK has also vastly surpassed the industry average cash flow growth rate of -29.77%.
  • The gross profit margin for CANADIAN IMPERIAL BANK is currently very high, coming in at 76.75%. 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 20.76% trails the industry average.
  • CM, with its decline in revenue, slightly underperformed the industry average of 0.1%. Since the same quarter one year prior, revenues slightly dropped by 2.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • CANADIAN IMPERIAL BANK's earnings per share declined by 20.8% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, CANADIAN IMPERIAL BANK reported lower earnings of $7.85 versus $8.12 in the prior year.
  • 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 greatly underperformed compared to the Commercial Banks industry average. The net income has decreased by 21.6% when compared to the same quarter one year ago, dropping from $1,174.00 million to $920.00 million.

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Greif

Dividend Yield: 4.10%

Greif (NYSE: GEF) shares currently have a dividend yield of 4.10%.

Greif, Inc. produces and sells industrial packaging products worldwide. The company has a P/E ratio of 26.70.

The average volume for Greif has been 483,900 shares per day over the past 30 days. Greif has a market cap of $1.1 billion and is part of the consumer non-durables industry. Shares are down 12.1% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Greif as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • Net operating cash flow has slightly increased to -$59.90 million or 4.61% when compared to the same quarter last year. Despite an increase in cash flow of 4.61%, GREIF INC is still growing at a significantly lower rate than the industry average of 91.98%.
  • GREIF INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, GREIF INC reported lower earnings of $1.94 versus $3.10 in the prior year. This year, the market expects an improvement in earnings ($2.21 versus $1.94).
  • The gross profit margin for GREIF INC is rather low; currently it is at 20.89%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.33% trails that of 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 Containers & Packaging industry and the overall market, GREIF INC's return on equity is below that of both the industry average and the S&P 500.

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