Best 3 Yielding Buy-Rated Stocks: KCAP, PFLT, NVEC
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer
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 "Buy."
Dividend Yield: 13.20%
(NASDAQ:
) shares currently have a dividend yield of 13.20%.
KCAP Financial, Inc. is a private equity and venture capital firm specializing in mid market, buyouts, and mezzanine investments. It focuses on mature and middle market companies. The company has a P/E ratio of 10.53.
The average volume for KCAP Financial has been 212,400 shares per day over the past 30 days. KCAP Financial has a market cap of $278.6 million and is part of the financial services industry. Shares are up 11.1% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
KCAP Financial
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 13.1%. Since the same quarter one year prior, revenues slightly increased by 8.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 8957.0% when compared to the same quarter one year prior, rising from -$0.09 million to $8.24 million.
- Net operating cash flow has significantly increased by 118.41% to $10.37 million when compared to the same quarter last year. In addition, KCAP FINANCIAL INC has also vastly surpassed the industry average cash flow growth rate of 6.53%.
- The gross profit margin for KCAP FINANCIAL INC is currently very high, coming in at 82.26%. Regardless of KCAP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, KCAP's net profit margin of 60.22% significantly outperformed against the industry.
- KCAP FINANCIAL INC 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, KCAP FINANCIAL INC reported lower earnings of $0.53 versus $0.91 in the prior year. This year, the market expects an improvement in earnings ($0.97 versus $0.53).
- You can view the full KCAP Financial Ratings Report.
PennantPark Floating Rate Capital
Dividend Yield: 7.70%
PennantPark Floating Rate Capital
(NASDAQ:
) shares currently have a dividend yield of 7.70%.
PennantPark Floating Rate Capital Ltd. is a business development company. It seeks to make secondary direct, debt, equity, and loan investments. The fund seeks to invest through floating rate loans in private or thinly traded or small market-cap, public middle market companies. The company has a P/E ratio of 10.11.
The average volume for PennantPark Floating Rate Capital has been 66,700 shares per day over the past 30 days. PennantPark Floating Rate Capital has a market cap of $207.8 million and is part of the financial services industry. Shares are up 1.5% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
PennantPark Floating Rate Capital
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 13.1%. Since the same quarter one year prior, revenues slightly increased by 9.2%. 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 significantly increased by 134.92% to $12.19 million when compared to the same quarter last year. In addition, PENNANTPARK FLOATING RT CAP has also vastly surpassed the industry average cash flow growth rate of 6.53%.
- The gross profit margin for PENNANTPARK FLOATING RT CAP is currently very high, coming in at 84.98%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, PFLT's net profit margin of 5.85% significantly trails the industry average.
- PENNANTPARK FLOATING RT CAP 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, PENNANTPARK FLOATING RT CAP increased its bottom line by earning $1.38 versus $1.30 in the prior year. For the next year, the market is expecting a contraction of 6.5% in earnings ($1.29 versus $1.38).
- In its most recent trading session, PFLT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- You can view the full PennantPark Floating Rate Capital Ratings Report.
Dividend Yield: 13.00%
(NASDAQ:
) shares currently have a dividend yield of 13.00%.
NVE Corporation is engaged in the development and sale of devices that use spintronics, a nanotechnology, which relies on electron spin rather than electron charge to acquire, store, and transmit information. The company has a P/E ratio of 23.15.
The average volume for NVE has been 10,800 shares per day over the past 30 days. NVE has a market cap of $307.0 million and is part of the electronics industry. Shares are down 10.9% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
NVE
as a
. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations, increase in stock price during the past year and increase in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
Highlights from the ratings report include:
- NVEC 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. Along with this, the company maintains a quick ratio of 21.67, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for NVE CORP is currently very high, coming in at 80.29%. Regardless of NVEC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NVEC's net profit margin of 44.39% significantly outperformed against the industry.
- Net operating cash flow has remained constant at $3.85 million with no significant change when compared to the same quarter last year. Along with maintaining stable cash flow from operations, the firm exceeded the industry average cash flow growth rate of -15.77%.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- NVE CORP reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, NVE CORP reported lower earnings of $2.29 versus $2.43 in the prior year. This year, the market expects an improvement in earnings ($2.92 versus $2.29).
- You can view the full NVE Ratings Report.
Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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