3 Hold-Rated Dividend Stocks: OXBR, KNOP, NYMT

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."

Oxbridge Re Holdings

Dividend Yield: 9.10%

Oxbridge Re Holdings (NASDAQ: OXBR) shares currently have a dividend yield of 9.10%.

Oxbridge Re Holdings Limited provides reinsurance business solutions primarily to property and casualty insurers in the Gulf Coast region of the United States. It writes collateralized policies to cover property losses from specified catastrophes. The company has a P/E ratio of 8.35.

The average volume for Oxbridge Re Holdings has been 5,700 shares per day over the past 30 days. Oxbridge Re Holdings has a market cap of $31.9 million and is part of the insurance industry. Shares are down 8.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Oxbridge Re Holdings 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, good cash flow from operations and expanding profit margins. 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:
  • OXBR has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
  • Net operating cash flow has increased to $2.63 million or 11.27% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -17.24%.
  • OXBRIDGE RE HOLDINGS LTD's earnings per share declined by 43.3% 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, OXBRIDGE RE HOLDINGS LTD increased its bottom line by earning $0.75 versus $0.67 in the prior year. This year, the market expects an improvement in earnings ($0.98 versus $0.75).
  • 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 Insurance industry and the overall market on the basis of return on equity, OXBRIDGE RE HOLDINGS LTD has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • 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 Insurance industry. The net income has significantly decreased by 43.0% when compared to the same quarter one year ago, falling from $1.83 million to $1.04 million.

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KNOT Offshore Partners

Dividend Yield: 11.20%

KNOT Offshore Partners (NYSE: KNOP) shares currently have a dividend yield of 11.20%.

KNOT Offshore Partners LP owns and operates shuttle tankers under long-term charters in the North Sea and Brazil. The company provides crude oil loading, transportation, and storage services under time charters and bareboat charters. As of March 18, 2016, it had a fleet of 10 shuttle tankers. The company has a P/E ratio of 12.90.

The average volume for KNOT Offshore Partners has been 63,000 shares per day over the past 30 days. KNOT Offshore Partners has a market cap of $504.5 million and is part of the transportation industry. Shares are up 35% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates KNOT Offshore Partners as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself.

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 15.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • KNOT OFFSHORE PRTNRS LP has improved earnings per share by 21.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, KNOT OFFSHORE PRTNRS LP increased its bottom line by earning $1.57 versus $1.34 in the prior year. This year, the market expects an improvement in earnings ($1.75 versus $1.57).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, KNOT OFFSHORE PRTNRS 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.
  • KNOP has underperformed the S&P 500 Index, declining 19.84% from its price level of one year ago. 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.
  • The debt-to-equity ratio of 1.28 is relatively high when compared with the industry average, suggesting a need for better debt level management.

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New York Mortgage

Dividend Yield: 15.10%

New York Mortgage (NASDAQ: NYMT) shares currently have a dividend yield of 15.10%.

New York Mortgage Trust, Inc., a real estate investment trust (REIT), engages in acquiring, investing in, financing, and managing mortgage-related and financial assets in the United States. The company has a P/E ratio of 11.37.

The average volume for New York Mortgage has been 734,700 shares per day over the past 30 days. New York Mortgage has a market cap of $693.7 million and is part of the real estate industry. Shares are up 18.8% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates New York Mortgage as a hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels 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 poor profit margins.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 209.09% to $18.52 million when compared to the same quarter last year. In addition, NEW YORK MORTGAGE TRUST INC has also vastly surpassed the industry average cash flow growth rate of 11.76%.
  • NYMT, with its decline in revenue, underperformed when compared the industry average of 12.0%. Since the same quarter one year prior, revenues slightly dropped by 10.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 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 significantly decreased by 28.0% when compared to the same quarter one year ago, falling from $23.54 million to $16.95 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, NEW YORK MORTGAGE TRUST INC's return on equity is below that of both the industry average and the S&P 500.

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