What To Hold: 3 Hold-Rated Dividend Stocks FSFR, AMTG, CYD

 

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: 13.10%

 

Fifth Street Senior Floating Rate (NASDAQ: FSFR) shares currently have a dividend yield of 13.10%.

 

Fifth Street Senior Floating Rate Corp. was incorporated in 2013 and is based in Greenwich, CT. The company has a P/E ratio of 9.28.

 

The average volume for Fifth Street Senior Floating Rate has been 173,100 shares per day over the past 30 days. Fifth Street Senior Floating Rate has a market cap of $270.8 million and is part of the financial services industry. Shares are down 10.9% year-to-date as of the close of trading on Thursday.

 

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 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 3.9%. 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.
  • When compared to other companies in the Capital Markets industry and the overall market, FIFTH STREET SR FLTG RATE CP's return on equity is below that of both the industry average and the S&P 500.
  • 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 ($1.13 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 35.38%, 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.

 

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.

 

Apollo Residential Mortgage

 

Dividend Yield: 13.30%

 

Apollo Residential Mortgage (NYSE: AMTG) shares currently have a dividend yield of 13.30%.

 

Apollo Residential Mortgage, Inc. primarily invests in residential mortgage assets in the United States. The company has a P/E ratio of 6.15.

 

The average volume for Apollo Residential Mortgage has been 213,400 shares per day over the past 30 days. Apollo Residential Mortgage has a market cap of $462.2 million and is part of the real estate industry. Shares are down 8.4% year-to-date as of the close of trading on Thursday.

 

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 Apollo Residential Mortgage as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and expanding profit margins. 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:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.9%. Since the same quarter one year prior, revenues slightly increased by 2.9%. 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 APOLLO RESIDENTIAL MTG INC is currently very high, coming in at 83.11%. Regardless of AMTG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AMTG's net profit margin of 54.46% significantly outperformed against the industry.
  • Net operating cash flow has decreased to $6.52 million or 46.99% 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.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income has decreased by 23.2% when compared to the same quarter one year ago, dropping from $27.88 million to $21.41 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.

 

China Yuchai International

 

Dividend Yield: 7.30%

 

China Yuchai International (NYSE: CYD) shares currently have a dividend yield of 7.30%.

 

China Yuchai International Limited, through its subsidiaries, manufactures and sells diesel and natural gas engines in the People's Republic of China (PRC) and other countries. It operates in two segments, Yuchai and HLGE. The company has a P/E ratio of 5.31.

 

The average volume for China Yuchai International has been 45,400 shares per day over the past 30 days. China Yuchai International has a market cap of $571.8 million and is part of the industrial industry. Shares are down 21.5% year-to-date as of the close of trading on Thursday.

 

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 China Yuchai International as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

 

Highlights from the ratings report include:
  • The current debt-to-equity ratio, 0.37, is low and is below the industry average, implying that there has been successful management of debt levels.
  • CYD, with its decline in revenue, slightly underperformed the industry average of 15.4%. Since the same quarter one year prior, revenues fell by 18.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 Machinery industry. The net income has significantly decreased by 41.3% when compared to the same quarter one year ago, falling from $28.95 million to $17.00 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. In comparison to the other companies in the Machinery industry and the overall market, CHINA YUCHAI INTERNATIONAL's return on equity is significantly below that of the industry average and is below that of 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.

 

Other helpful dividend tools from TheStreet:

More from Markets

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Jim Cramer: The 10-Year Yield Could Go to 2.75%

Jim Cramer: The 10-Year Yield Could Go to 2.75%

Oil Slumps, Gas Spikes Ahead of Holiday Weekend; Assessing the Chipmakers--ICYMI

Oil Slumps, Gas Spikes Ahead of Holiday Weekend; Assessing the Chipmakers--ICYMI

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%