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."

World Point Terminals

Dividend Yield: 7.40%

World Point Terminals

(NYSE:

WPT

) shares currently have a dividend yield of 7.40%.

World Point Terminals, LP owns, operates, develops, and acquires terminals and other assets for the storage of light refined products, heavy refined products, and crude oil in the East Coast, Gulf Coast, and Midwest regions of the United States. The company has a P/E ratio of 16.44.

The average volume for World Point Terminals has been 34,300 shares per day over the past 30 days. World Point Terminals has a market cap of $561.6 million and is part of the energy industry. Shares are up 19.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

World Point Terminals

as a

buy

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • WPT 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 3.14, which clearly demonstrates the ability to cover short-term cash needs.
  • 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, WORLD POINT TERMINALS's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • The gross profit margin for WORLD POINT TERMINALS is rather high; currently it is at 69.04%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 38.35% significantly outperformed against the industry average.
  • Despite the weak revenue results, WPT has outperformed against the industry average of 24.0%. Since the same quarter one year prior, revenues slightly dropped by 2.3%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
  • WORLD POINT TERMINALS reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, WORLD POINT TERMINALS reported lower earnings of $0.95 versus $0.98 in the prior year. This year, the market expects an improvement in earnings ($1.09 versus $0.95).

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Solar Capital

Dividend Yield: 8.00%

Solar Capital

(NASDAQ:

SLRC

) shares currently have a dividend yield of 8.00%.

Solar Capital Ltd. is a business development company specializing in investments in leveraged middle market companies. The company has a P/E ratio of 25.47.

The average volume for Solar Capital has been 125,300 shares per day over the past 30 days. Solar Capital has a market cap of $850.0 million and is part of the financial services industry. Shares are up 22.6% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Solar Capital

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, expanding profit margins, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 13.7%. Since the same quarter one year prior, revenues rose by 32.8%. 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 158.5% when compared to the same quarter one year prior, rising from $10.90 million to $28.18 million.
  • The gross profit margin for SOLAR CAPITAL LTD is rather high; currently it is at 64.46%. Regardless of SLRC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SLRC's net profit margin of 82.79% significantly outperformed against the industry.
  • Net operating cash flow has significantly increased by 95.70% to -$1.02 million when compared to the same quarter last year. Despite an increase in cash flow, SOLAR CAPITAL LTD's average is still marginally south of the industry average growth rate of 100.83%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

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Gladstone Investment

Dividend Yield: 9.90%

Gladstone Investment

(NASDAQ:

GAIN

) shares currently have a dividend yield of 9.90%.

Gladstone Investment Corporation is a business development company specializing in buyouts; recapitalizations; refinancing existing debt; senior debt securities; junior subordinated debt securities; limited liability company interests, and warrants or options. The company has a P/E ratio of 54.14.

The average volume for Gladstone Investment has been 190,900 shares per day over the past 30 days. Gladstone Investment has a market cap of $229.5 million and is part of the financial services industry. Shares are down 1.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Gladstone Investment

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 13.7%. Since the same quarter one year prior, revenues rose by 11.3%. 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 GLADSTONE INVESTMENT CORP/DE is rather high; currently it is at 68.15%. Regardless of GAIN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GAIN's net profit margin of 181.80% significantly outperformed against the industry.
  • Net operating cash flow has significantly increased by 96.85% to -$1.29 million when compared to the same quarter last year. Despite an increase in cash flow, GLADSTONE INVESTMENT CORP/DE's average is still marginally south of the industry average growth rate of 100.83%.
  • 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. 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.
  • The share price of GLADSTONE INVESTMENT CORP/DE has not done very well: it is down 10.19% 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.

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