Buy-Rated Dividend Stocks: Top 3 Companies: MTR, NMFC, HTGC
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: 9.50%
(NYSE:
) shares currently have a dividend yield of 9.50%.
Mesa Royalty Trust holds net overriding royalty interests in various oil and gas properties in the United States. It has interests in properties located in the Hugoton field of Kansas; the San Juan Basin field of New Mexico and Colorado; and the Yellow Creek field of Wyoming. The company has a P/E ratio of 6.02.
The average volume for Mesa Royalty has been 8,000 shares per day over the past 30 days. Mesa Royalty has a market cap of $38.4 million and is part of the financial services industry. Shares are down 20.1% year-to-date as of the close of trading on Thursday.
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TheStreet Ratings rates
Mesa Royalty
as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- MTR's very impressive revenue growth greatly exceeded the industry average of 19.6%. Since the same quarter one year prior, revenues leaped by 97.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- MTR 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 3.32, which clearly demonstrates the ability to cover short-term cash needs.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MESA ROYALTY TRUST's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 100.7% when compared to the same quarter one year prior, rising from $0.88 million to $1.77 million.
- The gross profit margin for MESA ROYALTY TRUST is currently very high, coming in at 100.00%. MTR has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, MTR's net profit margin of 97.95% significantly outperformed against the industry.
- You can view the full Mesa Royalty Ratings Report.
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Dividend Yield: 9.30%
(NYSE:
) shares currently have a dividend yield of 9.30%.
New Mountain Finance Corporation is a Business Development Company specializing in investments in middle market companies and debt securities at various levels of the capital structure, including first and second lien debt, unsecured notes, bonds, and mezzanine securities. The company has a P/E ratio of 10.18.
The average volume for New Mountain Finance has been 310,800 shares per day over the past 30 days. New Mountain Finance has a market cap of $850.2 million and is part of the financial services industry. Shares are down 1.8% year-to-date as of the close of trading on Thursday.
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TheStreet Ratings rates
New Mountain Finance
as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
Highlights from the ratings report include:
- NMFC's very impressive revenue growth greatly exceeded the industry average of 13.2%. Since the same quarter one year prior, revenues leaped by 57.7%. 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.
- The gross profit margin for NEW MOUNTAIN FINANCE CORP is currently very high, coming in at 75.68%. It has increased significantly from the same period last year. Along with this, the net profit margin of 21.35% is above that of the industry average.
- 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 Capital Markets industry and the overall market, NEW MOUNTAIN FINANCE CORP's return on equity is below that of both the industry average and the S&P 500.
- In its most recent trading session, NMFC 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.
- NEW MOUNTAIN FINANCE CORP 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, NEW MOUNTAIN FINANCE CORP reported lower earnings of $1.81 versus $2.20 in the prior year. For the next year, the market is expecting a contraction of 22.1% in earnings ($1.41 versus $1.81).
- You can view the full New Mountain Finance Ratings Report.
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Hercules Technology Growth Capital
Dividend Yield: 9.00%
Hercules Technology Growth Capital
(NYSE:
) shares currently have a dividend yield of 9.00%.
Hercules Technology Growth Capital, Inc. The company has a P/E ratio of 11.66.
The average volume for Hercules Technology Growth Capital has been 376,600 shares per day over the past 30 days. Hercules Technology Growth Capital has a market cap of $890.4 million and is part of the real estate industry. Shares are down 8.1% year-to-date as of the close of trading on Thursday.
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TheStreet Ratings rates
Hercules Technology Growth Capital
as a
. Among the primary strengths of the company is its expanding profit margins over time. 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 gross profit margin for HERCULES TECH GROWTH CAP INC is currently very high, coming in at 81.78%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 40.99% significantly outperformed against the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 13.2%. Since the same quarter one year prior, revenues slightly dropped by 9.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- HERCULES TECH GROWTH CAP 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. 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, HERCULES TECH GROWTH CAP INC increased its bottom line by earning $1.62 versus $0.92 in the prior year. For the next year, the market is expecting a contraction of 31.2% in earnings ($1.12 versus $1.62).
- The share price of HERCULES TECH GROWTH CAP INC has not done very well: it is down 6.70% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
- Net operating cash flow has significantly decreased to $13.01 million or 86.76% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full Hercules Technology Growth Capital Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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