3 Hold-Rated Dividend Stocks: NLY, ENLK, GOV

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."

Annaly Capital Management

Dividend Yield: 12.20%

Annaly Capital Management (NYSE: NLY) shares currently have a dividend yield of 12.20%.

Annaly Capital Management, Inc. owns a portfolio of real estate related investments in the United States.

The average volume for Annaly Capital Management has been 8,769,400 shares per day over the past 30 days. Annaly Capital Management has a market cap of $9.3 billion and is part of the real estate industry. Shares are down 9.1% year-to-date as of the close of trading on Wednesday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreet Ratings rates Annaly Capital Management as a hold. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • NLY, with its decline in revenue, underperformed when compared the industry average of 8.5%. Since the same quarter one year prior, revenues slightly dropped by 3.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for ANNALY CAPITAL MANAGEMENT is currently very high, coming in at 91.34%. Regardless of NLY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NLY's net profit margin of -80.97% significantly underperformed when compared to the industry average.
  • ANNALY CAPITAL MANAGEMENT has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ANNALY CAPITAL MANAGEMENT swung to a loss, reporting -$0.96 versus $3.72 in the prior year. This year, the market expects an improvement in earnings ($1.10 versus -$0.96).
  • 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 134.3% when compared to the same quarter one year ago, falling from -$203.35 million to -$476.41 million.
  • 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, ANNALY CAPITAL MANAGEMENT's return on equity significantly trails that of both the industry average and the S&P 500.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

EnLink Midstream Partners

Dividend Yield: 6.30%

EnLink Midstream Partners (NYSE: ENLK) shares currently have a dividend yield of 6.30%.

Enlink Midstream Partners, LP, through its subsidiary, EnLink Midstream Operating, LP, provides midstream energy services. The company has a P/E ratio of 40.85.

The average volume for EnLink Midstream Partners has been 1,081,000 shares per day over the past 30 days. EnLink Midstream Partners has a market cap of $6.1 billion and is part of the energy industry. Shares are down 16.9% year-to-date as of the close of trading on Wednesday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreet Ratings rates EnLink Midstream 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 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, unimpressive growth in net income and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 38.6%. Since the same quarter one year prior, revenues rose by 29.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • The current debt-to-equity ratio, 0.44, 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 1.01, which illustrates the ability to avoid short-term cash problems.
  • ENLINK MIDSTREAM PARTNERS LP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ENLINK MIDSTREAM PARTNERS LP increased its bottom line by earning $0.60 versus $0.00 in the prior year. For the next year, the market is expecting a contraction of 16.2% in earnings ($0.50 versus $0.60).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 60.2% when compared to the same quarter one year ago, falling from $49.20 million to $19.60 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 Oil, Gas & Consumable Fuels industry and the overall market, ENLINK MIDSTREAM PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

Government Properties Income

Dividend Yield: 9.00%

Government Properties Income (NYSE: GOV) shares currently have a dividend yield of 9.00%.

Government Properties Income Trust is an equity real estate investment trust launched and managed by Reit Management & Research LLC. The trust invests in the real estate markets of United States. It engages in investment, operation and maintenance of real estate assets. The company has a P/E ratio of 118.94.

The average volume for Government Properties Income has been 748,100 shares per day over the past 30 days. Government Properties Income has a market cap of $1.3 billion and is part of the real estate industry. Shares are down 17.3% year-to-date as of the close of trading on Wednesday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreet Ratings rates Government Properties Income as a hold. Among the primary strengths of the company is its revenue growth. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.5%. Since the same quarter one year prior, revenues slightly increased by 4.3%. 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 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, GOVERNMENT PPTYS INCOME TR's return on equity significantly trails that of both the industry average and the S&P 500.
  • GOVERNMENT PPTYS INCOME TR has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, GOVERNMENT PPTYS INCOME TR reported lower earnings of $0.87 versus $1.02 in the prior year. For the next year, the market is expecting a contraction of 12.6% in earnings ($0.76 versus $0.87).
  • 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 319.7% when compared to the same quarter one year ago, falling from $15.19 million to -$33.37 million.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

Other helpful dividend tools from TheStreet:

If you liked this article you might like

Intuitive Surgical, Chicago Mercantile Exchange: 'Mad Money' Lightning Round

Intuitive Surgical, Chicago Mercantile Exchange: 'Mad Money' Lightning Round

A Roaring, Rip-Snorting Bull: Cramer's 'Mad Money' Recap (Wednesday 11/1/17)

A Roaring, Rip-Snorting Bull: Cramer's 'Mad Money' Recap (Wednesday 11/1/17)

Which Way Are These Stocks Going?

Which Way Are These Stocks Going?

5 Amazing Dividend Stocks in This Uncertain Market

5 Amazing Dividend Stocks in This Uncertain Market

10 High-Yielding Stocks to Own Ahead of a Surprising Late Summer Market Swoon

10 High-Yielding Stocks to Own Ahead of a Surprising Late Summer Market Swoon