Buy-Rated Dividend Stocks: Top 3 Companies: FDUS, BKCC, GAIN
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 or Stephanie Link.
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: 9.30%
(NASDAQ:
) shares currently have a dividend yield of 9.30%.
Fidus Investment Corporation operates as an externally managed, closed-end, and non-diversified management investment company. The company provides customized debt and equity financing solutions to lower middle-market companies in the United States. The company has a P/E ratio of 7.40.
The average volume for Fidus Investment has been 96,200 shares per day over the past 30 days. Fidus Investment has a market cap of $263.2 million and is part of the financial services industry. Shares are up 11.8% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
Fidus Investment
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, expanding profit margins and growth in earnings per share. 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 12.8%. Since the same quarter one year prior, revenues rose by 10.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Capital Markets industry average. The net income increased by 16.8% when compared to the same quarter one year prior, going from $4.54 million to $5.30 million.
- The gross profit margin for FIDUS INVESTMENT CORP is rather high; currently it is at 67.05%. Regardless of FDUS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FDUS's net profit margin of 46.81% significantly outperformed against the industry.
- FIDUS INVESTMENT CORP has improved earnings per share by 15.2% 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, FIDUS INVESTMENT CORP increased its bottom line by earning $2.01 versus $1.91 in the prior year. For the next year, the market is expecting a contraction of 21.4% in earnings ($1.58 versus $2.01).
- FDUS has underperformed the S&P 500 Index, declining 21.67% from its price level of one year ago. 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 Fidus Investment Ratings Report.
BlackRock Kelso Capital Corporation
Dividend Yield: 9.70%
BlackRock Kelso Capital Corporation
(NASDAQ:
) shares currently have a dividend yield of 9.70%.
BlackRock Kelso Capital Corporation is Business Development Company specializing in investments in middle market companies. The fund invests in all industries. The company has a P/E ratio of 6.06.
The average volume for BlackRock Kelso Capital Corporation has been 396,200 shares per day over the past 30 days. BlackRock Kelso Capital Corporation has a market cap of $646.3 million and is part of the financial services industry. Shares are up 7.1% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
BlackRock Kelso Capital Corporation
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and compelling growth in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 12.8%. Since the same quarter one year prior, revenues slightly increased by 5.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Capital Markets industry and the overall market, BLACKROCK KELSO CAPITAL CORP's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for BLACKROCK KELSO CAPITAL CORP is currently very high, coming in at 75.81%. It has increased significantly from the same period last year. Along with this, the net profit margin of 87.35% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 53.03% to -$51.77 million when compared to the same quarter last year. In addition, BLACKROCK KELSO CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of -6.01%.
- 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 46.0% when compared to the same quarter one year prior, rising from $19.84 million to $28.97 million.
- You can view the full BlackRock Kelso Capital Corporation Ratings Report.
Gladstone Investment Corporation
Dividend Yield: 9.10%
Gladstone Investment Corporation
(NASDAQ:
) shares currently have a dividend yield of 9.10%.
Gladstone Investment Corporation is a business development company specializing in buyouts. The company has a P/E ratio of 56.50.
The average volume for Gladstone Investment Corporation has been 105,700 shares per day over the past 30 days. Gladstone Investment Corporation has a market cap of $209.4 million and is part of the financial services industry. Shares are up 13.7% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
Gladstone Investment Corporation
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, expanding profit margins, impressive record of earnings per share growth and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 12.8%. Since the same quarter one year prior, revenues rose by 33.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for GLADSTONE INVESTMENT CORP/DE is currently very high, coming in at 72.39%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 65.63% significantly outperformed against the industry average.
- 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 171.0% when compared to the same quarter one year prior, rising from -$10.69 million to $7.59 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 Capital Markets industry and the overall market on the basis of return on equity, GLADSTONE INVESTMENT CORP/DE has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- GLADSTONE INVESTMENT CORP/DE 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, GLADSTONE INVESTMENT CORP/DE swung to a loss, reporting -$0.06 versus $0.63 in the prior year. This year, the market expects an improvement in earnings ($0.76 versus -$0.06).
- You can view the full Gladstone Investment Corporation Ratings Report.
Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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