What To Hold: 3 Hold-Rated Dividend Stocks TLLP, SUI, RCI

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."

Tesoro Logistics

Dividend Yield: 4.90%

Tesoro Logistics (NYSE: TLLP) shares currently have a dividend yield of 4.90%.

Tesoro Logistics LP owns, operates, develops, and acquires logistics assets related to crude oil and refined products in the United States. It operates in three segments: Gathering, Processing, and Terminalling and Transportation. The company has a P/E ratio of 178.78.

The average volume for Tesoro Logistics has been 300,300 shares per day over the past 30 days. Tesoro Logistics has a market cap of $4.6 billion and is part of the energy industry. Shares are down 1.8% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Tesoro Logistics as a hold. The company's strengths can be seen in multiple areas, such as its robust 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, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • TLLP's very impressive revenue growth greatly exceeded the industry average of 38.6%. Since the same quarter one year prior, revenues leaped by 107.1%. 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 TESORO LOGISTICS LP is rather high; currently it is at 67.30%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 24.33% significantly outperformed against the industry average.
  • TESORO LOGISTICS LP' 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, TESORO LOGISTICS LP reported lower earnings of $1.42 versus $1.45 in the prior year. This year, the market expects an improvement in earnings ($2.69 versus $1.42).
  • The debt-to-equity ratio of 1.32 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, TLLP maintains a poor quick ratio of 0.78, which illustrates the inability to avoid short-term cash problems.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TESORO LOGISTICS LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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Sun Communities

Dividend Yield: 4.10%

Sun Communities (NYSE: SUI) shares currently have a dividend yield of 4.10%.

Sun Communities, Inc. operates as a real estate investment trust (REIT). It owns, operates, and develops manufactured housing communities in the midwestern, southern, and southeastern United States. The company has a P/E ratio of 137.83.

The average volume for Sun Communities has been 244,100 shares per day over the past 30 days. Sun Communities has a market cap of $3.4 billion and is part of the real estate industry. Shares are up 4.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Sun Communities as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 36.8%. 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.
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 17.0% when compared to the same quarter one year prior, going from $9.36 million to $10.96 million.
  • Compared to its closing price of one year ago, SUI's share price has jumped by 31.78%, exceeding the performance of the broader market during that same time frame. 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.
  • The gross profit margin for SUN COMMUNITIES INC is rather low; currently it is at 19.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 7.17% significantly trails the industry average.
  • Net operating cash flow has declined marginally to $40.94 million or 8.34% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, SUN COMMUNITIES INC has marginally lower results.

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Rogers Communications

Dividend Yield: 4.40%

Rogers Communications (NYSE: RCI) shares currently have a dividend yield of 4.40%.

Rogers Communications Inc. operates as a communications and media company in Canada. The company's Wireless segment offers wireless telecommunications services to consumers and businesses under the Rogers, Fido, and chatr brands; and wireless devices, services, and applications. The company has a P/E ratio of 11.84.

The average volume for Rogers Communications has been 502,600 shares per day over the past 30 days. Rogers Communications has a market cap of $14.0 billion and is part of the telecommunications industry. Shares are down 11.7% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Rogers Communications as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, 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, generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth significantly trails the industry average of 56.3%. Since the same quarter one year prior, revenues slightly increased by 5.1%. 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.
  • 35.62% is the gross profit margin for ROGERS COMMUNICATIONS which we consider to be strong. Regardless of RCI'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 8.03% trails the industry average.
  • The debt-to-equity ratio is very high at 3.04 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.38, which clearly demonstrates the inability to cover short-term cash needs.
  • Net operating cash flow has decreased to $227.00 million or 44.36% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, ROGERS COMMUNICATIONS has marginally lower results.

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