What To Buy: Top 3 Buy-Rated Dividend Stocks: ARLP, FDUS, BKCC
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: 7.50%
(NASDAQ:
) shares currently have a dividend yield of 7.50%.
Alliance Resource Partners, L.P. produces and markets coal primarily to utilities and industrial users in the United States. It operates through the Illinois Basin, Appalachia, White Oak, and Other and Corporate segments. The company has a P/E ratio of 7.27.
The average volume for Alliance Resource Partners has been 238,300 shares per day over the past 30 days. Alliance Resource Partners has a market cap of $2.6 billion and is part of the metals & mining industry. Shares are down 20.6% year-to-date as of the close of trading on Friday.
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TheStreet Ratings rates
Alliance Resource Partners
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, notable return on equity, attractive valuation levels 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:
- The revenue growth came in higher than the industry average of 19.6%. Since the same quarter one year prior, revenues slightly increased by 4.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 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 Oil, Gas & Consumable Fuels industry and the overall market, ALLIANCE RESOURCE PTNRS -LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- 37.83% is the gross profit margin for ALLIANCE RESOURCE PTNRS -LP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.93% significantly outperformed against the industry average.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 24.6% when compared to the same quarter one year prior, going from $99.29 million to $123.69 million.
- You can view the full Alliance Resource Partners Ratings Report.
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Dividend Yield: 9.50%
(NASDAQ:
) shares currently have a dividend yield of 9.50%.
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 7.18.
The average volume for Fidus Investment has been 78,000 shares per day over the past 30 days. Fidus Investment has a market cap of $255.9 million and is part of the financial services industry. Shares are up 8.9% year-to-date as of the close of trading on Friday.
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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 13.2%. 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 17.2% in earnings ($1.67 versus $2.01).
- FDUS has underperformed the S&P 500 Index, declining 17.41% 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.
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Dividend Yield: 9.10%
(NASDAQ:
) shares currently have a dividend yield of 9.10%.
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 6.43.
The average volume for BlackRock Capital Investment has been 423,200 shares per day over the past 30 days. BlackRock Capital Investment has a market cap of $686.2 million and is part of the financial services industry. Shares are up 12.1% year-to-date as of the close of trading on Friday.
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TheStreet Ratings rates
BlackRock Capital Investment
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. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 13.2%. 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 CAPITAL INVT CORP's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for BLACKROCK CAPITAL INVT 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. The firm also exceeded the industry average cash flow growth rate of 5.95%.
- 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 Capital Investment Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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