3 Hold-Rated Dividend Stocks: HSON, GSBD, MMLP

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."

Hudson Global

Dividend Yield: 9.00%

Hudson Global (NASDAQ: HSON) shares currently have a dividend yield of 9.00%.

Hudson Global, Inc. provides professional-level recruitment and related talent solutions for small to large-sized corporations and government agencies worldwide. The company has a P/E ratio of 14.80.

The average volume for Hudson Global has been 38,200 shares per day over the past 30 days. Hudson Global has a market cap of $76.0 million and is part of the diversified services industry. Shares are down 25.5% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Hudson Global as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we find that the stock has had a decline in price during the past year.

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 Professional Services industry. The net income increased by 49.0% when compared to the same quarter one year prior, rising from -$6.84 million to -$3.49 million.
  • HSON's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, HSON has a quick ratio of 1.79, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 40.76% is the gross profit margin for HUDSON GLOBAL INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -3.44% is in-line with the industry average.
  • After a year of stock price fluctuations, the net result is that HSON's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. This company's share value has not moved any higher or lower since its value 12 months ago.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Professional Services industry and the overall market, HUDSON GLOBAL INC's return on equity is below that of both the industry average and the S&P 500.

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Goldman Sachs BDC

Dividend Yield: 9.10%

Goldman Sachs BDC (NYSE: GSBD) shares currently have a dividend yield of 9.10%.

Goldman Sachs BDC, Inc. is a business development company specializing in middle market and mezzanine investment in private companies.

The average volume for Goldman Sachs BDC has been 94,800 shares per day over the past 30 days. Goldman Sachs BDC has a market cap of $720.4 million and is part of the real estate industry. Shares are up 4.3% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Goldman Sachs BDC as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and notable return on equity. 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 weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 24.5%. Since the same quarter one year prior, revenues rose by 18.9%. 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 GOLDMAN SACHS BDC INC is currently very high, coming in at 77.36%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.23% is above that of the industry average.
  • When compared to other companies in the Capital Markets industry and the overall market, GOLDMAN SACHS BDC INC's return on equity is below that of both the industry average and the S&P 500.
  • The share price of GOLDMAN SACHS BDC INC has not done very well: it is down 13.74% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • 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 Capital Markets industry. The net income has significantly decreased by 61.5% when compared to the same quarter one year ago, falling from $14.03 million to $5.40 million.

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Martin Midstream Partners

Dividend Yield: 14.50%

Martin Midstream Partners (NASDAQ: MMLP) shares currently have a dividend yield of 14.50%.

Martin Midstream Partners L.P. collects, transports, stores, and markets petroleum products and by-products in the United States Gulf Coast region. The company has a P/E ratio of 36.69.

The average volume for Martin Midstream Partners has been 166,900 shares per day over the past 30 days. Martin Midstream Partners has a market cap of $793.5 million and is part of the energy industry. Shares are up 3.2% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Martin Midstream Partners as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • 42.42% is the gross profit margin for MARTIN MIDSTREAM PARTNERS LP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 7.05% is above that of the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MARTIN MIDSTREAM PARTNERS LP's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Net operating cash flow has declined marginally to $45.31 million or 3.07% when compared to the same quarter last year. Despite a decrease in cash flow MARTIN MIDSTREAM PARTNERS LP is still fairing well by exceeding its industry average cash flow growth rate of -48.72%.
  • The debt-to-equity ratio is very high at 2.32 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, MMLP maintains a poor quick ratio of 0.80, which illustrates the inability to avoid short-term cash problems.

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