What To Hold: 3 Hold-Rated Dividend Stocks FSFR, CPG, GARS

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."

Fifth Street Senior Floating Rate

Dividend Yield: 11.80%

Fifth Street Senior Floating Rate (NASDAQ: FSFR) shares currently have a dividend yield of 11.80%.

Fifth Street Senior Floating Rate Corp. was incorporated in 2013 and is based in White Plains, New York. The company has a P/E ratio of 10.23.

The average volume for Fifth Street Senior Floating Rate has been 147,700 shares per day over the past 30 days. Fifth Street Senior Floating Rate has a market cap of $298.5 million and is part of the financial services industry. Shares are down 1.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Fifth Street Senior Floating Rate 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 expanding profit margins. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • FSFR's very impressive revenue growth greatly exceeded the industry average of 5.7%. Since the same quarter one year prior, revenues leaped by 249.1%. 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 FIFTH STREET SR FLTG RATE CP is currently very high, coming in at 70.70%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 55.03% significantly outperformed against the industry average.
  • Net operating cash flow has increased to -$22.08 million or 45.96% when compared to the same quarter last year. Despite an increase in cash flow of 45.96%, FIFTH STREET SR FLTG RATE CP is still growing at a significantly lower rate than the industry average of 191.30%.
  • FIFTH STREET SR FLTG RATE CP's earnings per share declined by 15.4% in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($1.18 versus $0.97).
  • Looking at the price performance of FSFR's shares over the past 12 months, there is not much good news to report: the stock is down 29.51%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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Crescent Point Energy

Dividend Yield: 10.10%

Crescent Point Energy (NYSE: CPG) shares currently have a dividend yield of 10.10%.

Crescent Point Energy Corp. acquires, explores, develops, and produces oil and natural gas properties in Western Canada and the United States. The company has a P/E ratio of 27.27.

The average volume for Crescent Point Energy has been 318,000 shares per day over the past 30 days. Crescent Point Energy has a market cap of $10.1 billion and is part of the energy industry. Shares are down 5.8% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Crescent Point Energy as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 38.7%. Since the same quarter one year prior, revenues rose by 11.1%. 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 current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that CPG's debt-to-equity ratio is low, the quick ratio, which is currently 0.51, displays a potential problem in covering short-term cash needs.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 47.97%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 225.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 249.1% when compared to the same quarter one year ago, falling from $30.89 million to -$46.06 million.

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Garrison Capital

Dividend Yield: 9.30%

Garrison Capital (NASDAQ: GARS) shares currently have a dividend yield of 9.30%.

Garrison Capital Inc. is a business development company specializing in investments primarily in the debt and equity of middle market companies. The company has a P/E ratio of 8.03.

The average volume for Garrison Capital has been 52,100 shares per day over the past 30 days. Garrison Capital has a market cap of $253.1 million and is part of the financial services industry. Shares are up 4.5% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Garrison Capital 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 deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 19.5%. 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 GARRISON CAPITAL INC is currently very high, coming in at 70.72%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 22.04% trails the industry average.
  • Net operating cash flow has significantly increased by 82.15% to $25.83 million when compared to the same quarter last year. Despite an increase in cash flow of 82.15%, GARRISON CAPITAL INC is still growing at a significantly lower rate than the industry average of 191.30%.
  • 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 Capital Markets industry. The net income has significantly decreased by 72.2% when compared to the same quarter one year ago, falling from $10.68 million to $2.97 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. When compared to other companies in the Capital Markets industry and the overall market, GARRISON CAPITAL INC's return on equity is below that of both the industry average and the S&P 500.

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