What To Hold: 3 Hold-Rated Dividend Stocks CXP, OFC, HCP

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."

Columbia Property

Dividend Yield: 4.60%

Columbia Property (NYSE: CXP) shares currently have a dividend yield of 4.60%.

Columbia Property Trust, Inc is an equity real estate investment trust. The firm invests in the real estate markets of the United States. It focuses on investing in and managing high-quality commercial office properties. The firm was formerly known as Wells Real Estate Investment Trust II Inc. The company has a P/E ratio of 34.10.

The average volume for Columbia Property has been 758,400 shares per day over the past 30 days. Columbia Property has a market cap of $3.3 billion and is part of the real estate industry. Shares are up 2.6% year-to-date as of the close of trading on Friday.

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

Highlights from the ratings report include:
  • CXP's revenue growth has slightly outpaced the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 14.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • COLUMBIA PROPERTY TRUST INC has improved earnings per share by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, COLUMBIA PROPERTY TRUST INC increased its bottom line by earning $0.76 versus $0.21 in the prior year. For the next year, the market is expecting a contraction of 84.2% in earnings ($0.12 versus $0.76).
  • The gross profit margin for COLUMBIA PROPERTY TRUST INC is rather low; currently it is at 18.32%. Regardless of CXP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CXP's net profit margin of 3.74% is significantly lower than the industry average.
  • Net operating cash flow has decreased to $44.53 million or 22.94% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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Corporate Office Properties

Dividend Yield: 4.20%

Corporate Office Properties (NYSE: OFC) shares currently have a dividend yield of 4.20%.

Corporate Office Properties Trust, a real estate investment trust (REIT), engages in the acquisition, development, ownership, management, and leasing of suburban office properties. The company has a P/E ratio of 74.49.

The average volume for Corporate Office Properties has been 772,800 shares per day over the past 30 days. Corporate Office Properties has a market cap of $2.5 billion and is part of the real estate industry. Shares are down 9.5% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Corporate Office Properties as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • OFC's revenue growth has slightly outpaced the industry average of 8.5%. Since the same quarter one year prior, revenues slightly increased by 9.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CORP OFFICE PPTYS TR INC has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CORP OFFICE PPTYS TR INC increased its bottom line by earning $0.25 versus $0.22 in the prior year. This year, the market expects an improvement in earnings ($0.69 versus $0.25).
  • Net operating cash flow has decreased to $41.89 million or 18.72% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • This stock has managed to decline in share value by 4.79% over the past twelve months. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

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HCP

Dividend Yield: 5.80%

HCP (NYSE: HCP) shares currently have a dividend yield of 5.80%.

HCP, Inc. is an independent hybrid real estate investment trust. The fund invests in real estate markets of the United States. The company has a P/E ratio of 42.52.

The average volume for HCP has been 3,405,200 shares per day over the past 30 days. HCP has a market cap of $18.1 billion and is part of the real estate industry. Shares are down 12.1% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates HCP as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • HCP's revenue growth has slightly outpaced the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 14.7%. 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.
  • The gross profit margin for HCP INC is rather high; currently it is at 56.55%. Regardless of HCP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HCP's net profit margin of -38.53% significantly underperformed when compared to the industry average.
  • 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 192.9% when compared to the same quarter one year ago, falling from $259.11 million to -$240.61 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, HCP INC underperformed against that of the industry average and is significantly less than that of the S&P 500.

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