What To Hold: 3 Hold-Rated Dividend Stocks MBT, SIR, LHO

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."

Mobile TeleSystems PJSC

Dividend Yield: 10.20%

Mobile TeleSystems PJSC (NYSE: MBT) shares currently have a dividend yield of 10.20%.

Public Joint-Stock Company Mobile TeleSystems provides telecommunication services in Russia and the Commonwealth of Independent States. The company has a P/E ratio of 8.42.

The average volume for Mobile TeleSystems PJSC has been 3,340,200 shares per day over the past 30 days. Mobile TeleSystems PJSC has a market cap of $8.5 billion and is part of the telecommunications industry. Shares are up 36.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Mobile TeleSystems PJSC as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, notable return on equity and growth in earnings per share. 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:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Wireless Telecommunication Services industry. The net income increased by 13.1% when compared to the same quarter one year prior, going from $188.35 million to $213.11 million.
  • 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. Compared to other companies in the Wireless Telecommunication Services industry and the overall market, MOBILE TELESYSTEMS PJSC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • MOBILE TELESYSTEMS PJSC has improved earnings per share by 10.5% 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, MOBILE TELESYSTEMS PJSC reported lower earnings of $0.67 versus $0.92 in the prior year. This year, the market expects an improvement in earnings ($57.07 versus $0.67).
  • Currently the debt-to-equity ratio of 1.90 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, MBT maintains a poor quick ratio of 0.86, which illustrates the inability to avoid short-term cash problems.
  • Net operating cash flow has decreased to $574.03 million or 15.17% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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Select Income REIT

Dividend Yield: 7.50%

Select Income REIT (NASDAQ: SIR) shares currently have a dividend yield of 7.50%.

Select Income REIT, a real estate investment trust (REIT), primarily owns and invests in single tenant and net leased properties. The company has a P/E ratio of 22.70.

The average volume for Select Income REIT has been 356,700 shares per day over the past 30 days. Select Income REIT has a market cap of $2.4 billion and is part of the real estate industry. Shares are up 33.6% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Select Income REIT as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and reasonable valuation levels. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 11.9%. Since the same quarter one year prior, revenues rose by 24.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 640.00% and other important driving factors, this stock has surged by 27.40% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • SELECT INCOME REIT reported significant earnings per share improvement 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, SELECT INCOME REIT reported lower earnings of $0.84 versus $1.91 in the prior year. This year, the market expects an improvement in earnings ($1.45 versus $0.84).
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, SELECT INCOME REIT's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $38.54 million or 1.76% 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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LaSalle Hotel Properties

Dividend Yield: 7.60%

LaSalle Hotel Properties (NYSE: LHO) shares currently have a dividend yield of 7.60%.

LaSalle Hotel Properties, a real estate investment trust (REIT), engages in the purchase, ownership, redevelopment, and leasing of primarily upscale and luxury full-service hotels in convention, resort, and urban business markets in the United States. The company has a P/E ratio of 20.77.

The average volume for LaSalle Hotel Properties has been 1,517,000 shares per day over the past 30 days. LaSalle Hotel Properties has a market cap of $2.7 billion and is part of the real estate industry. Shares are down 5.8% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates LaSalle Hotel Properties as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and reasonable valuation levels. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

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 Real Estate Investment Trusts (REITs) industry. The net income increased by 232.7% when compared to the same quarter one year prior, rising from $2.72 million to $9.06 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.9%. Since the same quarter one year prior, revenues slightly increased by 4.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • LASALLE HOTEL PROPERTIES has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. 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, LASALLE HOTEL PROPERTIES reported lower earnings of $1.09 versus $1.88 in the prior year. This year, the market expects an improvement in earnings ($1.26 versus $1.09).
  • This stock's share value has moved by only 33.51% over the past year. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • 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, LASALLE HOTEL PROPERTIES's return on equity is below that of both the industry average and the S&P 500.

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