3 Hold-Rated Dividend Stocks: SEAS, TOT, HT

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."

SeaWorld Entertainment

Dividend Yield: 6.00%

SeaWorld Entertainment (NYSE: SEAS) shares currently have a dividend yield of 6.00%.

SeaWorld Entertainment, Inc. operates as a theme park and entertainment company in the United States. The company has a P/E ratio of 174.50.

The average volume for SeaWorld Entertainment has been 1,580,200 shares per day over the past 30 days. SeaWorld Entertainment has a market cap of $1.2 billion and is part of the leisure industry. Shares are down 27.7% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates SeaWorld Entertainment as a hold. Among the primary strengths of the company is its revenue growth. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.1%. Since the same quarter one year prior, revenues slightly increased by 2.6%. 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.
  • SEAWORLD ENTERTAINMENT INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, SEAWORLD ENTERTAINMENT INC reported lower earnings of $0.57 versus $0.58 in the prior year. This year, the market expects an improvement in earnings ($0.71 versus $0.57).
  • 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 Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 92.8% when compared to the same quarter one year ago, falling from -$43.60 million to -$84.05 million.
  • The gross profit margin for SEAWORLD ENTERTAINMENT INC is currently extremely low, coming in at 13.32%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -38.16% is significantly below that of the industry average.
  • Net operating cash flow has decreased to $32.23 million or 14.46% 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.

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Total

Dividend Yield: 6.00%

Total (NYSE: TOT) shares currently have a dividend yield of 6.00%.

TOTAL S.A. operates as an integrated oil and gas company worldwide. The company operates through three segments: Upstream, Refining & Chemicals, and Marketing & Services.

The average volume for Total has been 2,100,000 shares per day over the past 30 days. Total has a market cap of $108.3 billion and is part of the energy industry. Shares are up 6.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Total as a hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, notable return on equity and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • 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, TOTAL SA'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.
  • The gross profit margin for TOTAL SA is currently extremely low, coming in at 12.91%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 5.83% is above that of the industry average.
  • Net operating cash flow has significantly decreased to $1,881.00 million or 57.12% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, TOTAL SA has marginally lower results.

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Hersha Hospitality

Dividend Yield: 6.90%

Hersha Hospitality (NYSE: HT) shares currently have a dividend yield of 6.90%.

Operates as a Maryland REIT that focuses primarily on owning and operating high quality, upscale and mid-scale limited service and extended-stay hotels. Its portfolio consisted of 31 wholly-owned limited and full service properties and joint venture investments in 16 hotels as of Dec. 31, 2005. The company has a P/E ratio of 35.87.

The average volume for Hersha Hospitality has been 589,500 shares per day over the past 30 days. Hersha Hospitality has a market cap of $710.7 million and is part of the real estate industry. Shares are down 23.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Hersha Hospitality as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and reasonable valuation levels. 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:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.0%. Since the same quarter one year prior, revenues rose by 11.7%. 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.
  • HERSHA HOSPITALITY TRUST has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, HERSHA HOSPITALITY TRUST reported lower earnings of $0.57 versus $1.08 in the prior year. This year, the market expects an improvement in earnings ($0.70 versus $0.57).
  • 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 95.9% when compared to the same quarter one year ago, falling from -$3.95 million to -$7.73 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 Real Estate Investment Trusts (REITs) industry and the overall market, HERSHA HOSPITALITY TRUST's return on equity is below that of both the industry average and the S&P 500.

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