What To Hold: 3 Hold-Rated Dividend Stocks ENI, BDN, 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."

Enersis

Dividend Yield: 5.40%

Enersis (NYSE: ENI) shares currently have a dividend yield of 5.40%.

Enersis S.A., an electric utility company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity in Chile, Argentina, Brazil, Colombia, and Peru. It generates electricity from hydroelectric, thermal, and wind power plants. The company has a P/E ratio of 539.67.

The average volume for Enersis has been 860,200 shares per day over the past 30 days. Enersis has a market cap of $15.9 billion and is part of the utilities industry. Shares are down 2.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Enersis as a hold. The company's strengths can be seen in multiple areas, such as its 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 and poor profit margins.

Highlights from the ratings report include:
  • ENI's revenue growth has slightly outpaced the industry average of 3.6%. Since the same quarter one year prior, revenues slightly increased by 4.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.58, 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 1.12, which illustrates the ability to avoid short-term cash problems.
  • ENERSIS SA 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, ENERSIS SA reported lower earnings of $0.96 versus $1.67 in the prior year. This year, the market expects an improvement in earnings ($1.25 versus $0.96).
  • The gross profit margin for ENERSIS SA is currently lower than what is desirable, coming in at 27.96%. Regardless of ENI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.15% trails the industry average.
  • In its most recent trading session, ENI has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

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Brandywine Realty

Dividend Yield: 4.30%

Brandywine Realty (NYSE: BDN) shares currently have a dividend yield of 4.30%.

Brandywine Realty Trust is a publically owned real estate investment trust. The firm invests in real estate markets of the United States. It makes investments in office, mixed-use, and industrial properties. The company has a P/E ratio of 230.83.

The average volume for Brandywine Realty has been 1,653,400 shares per day over the past 30 days. Brandywine Realty has a market cap of $2.5 billion and is part of the real estate industry. Shares are down 13.3% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Brandywine Realty as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income 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 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 485.7% when compared to the same quarter one year prior, rising from -$2.21 million to $8.54 million.
  • BRANDYWINE REALTY TRUST 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, BRANDYWINE REALTY TRUST swung to a loss, reporting -$0.01 versus $0.20 in the prior year. This year, the market expects an improvement in earnings ($0.26 versus -$0.01).
  • BDN, with its decline in revenue, slightly underperformed the industry average of 8.4%. Since the same quarter one year prior, revenues slightly dropped by 0.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Net operating cash flow has declined marginally to $45.61 million or 9.57% 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.
  • BDN has underperformed the S&P 500 Index, declining 9.78% from its price level of one year ago. 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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Rogers Communications

Dividend Yield: 4.60%

Rogers Communications (NYSE: RCI) shares currently have a dividend yield of 4.60%.

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 11.66.

The average volume for Rogers Communications has been 470,300 shares per day over the past 30 days. Rogers Communications has a market cap of $13.7 billion and is part of the telecommunications industry. Shares are down 13.2% 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 55.9%. 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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