What To Hold: 3 Hold-Rated Dividend Stocks NYMT, FGP, FIG

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."

New York Mortgage

Dividend Yield: 15.80%

New York Mortgage (NASDAQ: NYMT) shares currently have a dividend yield of 15.80%.

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 11.41.

The average volume for New York Mortgage has been 814,400 shares per day over the past 30 days. New York Mortgage has a market cap of $664.1 million and is part of the real estate industry. Shares are up 16.9% year-to-date as of the close of trading on Tuesday.

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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 11.39%.
  • NYMT, with its decline in revenue, underperformed when compared the industry average of 11.9%. 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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Ferrellgas Partners

Dividend Yield: 10.70%

Ferrellgas Partners (NYSE: FGP) shares currently have a dividend yield of 10.70%.

Ferrellgas Partners, L.P. distributes and sells propane and related equipment and supplies primarily in the United States. The company transports propane to propane distribution locations, tanks on customers' premises, or to portable propane tanks delivered to retailers.

The average volume for Ferrellgas Partners has been 328,600 shares per day over the past 30 days. Ferrellgas Partners has a market cap of $1.9 billion and is part of the energy industry. Shares are up 15.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Ferrellgas Partners as a hold. Among the primary strengths of the company is its respectable return on equity which we feel is likely to continue. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk.

Highlights from the ratings report include:
  • Compared to other companies in the Gas Utilities industry and the overall market, FERRELLGAS PARTNERS -LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite the weak revenue results, FGP has outperformed against the industry average of 20.1%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for FERRELLGAS PARTNERS -LP is currently lower than what is desirable, coming in at 25.30%. Regardless of FGP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.66% trails the industry average.
  • 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 Gas Utilities industry. The net income has significantly decreased by 47.8% when compared to the same quarter one year ago, falling from $35.81 million to $18.69 million.
  • The debt-to-equity ratio is very high at 39.97 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, FGP has a quick ratio of 0.64, this demonstrates the lack of ability of the company to cover short-term liquidity needs.

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Fortress Investment Group

Dividend Yield: 8.00%

Fortress Investment Group (NYSE: FIG) shares currently have a dividend yield of 8.00%.

Fortress Investment Group LLC is a publicly owned investment manager. The company has a P/E ratio of 28.44.

The average volume for Fortress Investment Group has been 751,600 shares per day over the past 30 days. Fortress Investment Group has a market cap of $1.7 billion and is part of the financial services industry. Shares are down 8.8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Fortress Investment Group as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 23.7%. Since the same quarter one year prior, revenues slightly increased by 2.2%. 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.
  • Net operating cash flow has increased to -$135.94 million or 11.46% when compared to the same quarter last year. In addition, FORTRESS INVESTMENT GRP LLC has also vastly surpassed the industry average cash flow growth rate of -199.57%.
  • FORTRESS INVESTMENT GRP LLC 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, FORTRESS INVESTMENT GRP LLC reported lower earnings of $0.28 versus $0.38 in the prior year. This year, the market expects an improvement in earnings ($0.72 versus $0.28).
  • 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 Capital Markets industry. The net income has significantly decreased by 124.6% when compared to the same quarter one year ago, falling from $34.71 million to -$8.53 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Capital Markets industry and the overall market, FORTRESS INVESTMENT GRP LLC's return on equity is below that of both the industry average and the S&P 500.

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