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."

OFS Capital

Dividend Yield: 10.40%

OFS Capital

(NASDAQ:

OFS

) shares currently have a dividend yield of 10.40%.

OFS Capital Corporation is a business development company specializing in direct and fund investments. For direct, it specializes in debt and structured equity investments in lower middle market companies. The fund invests in companies based in United States. The company has a P/E ratio of 6.92.

The average volume for OFS Capital has been 33,100 shares per day over the past 30 days. OFS Capital has a market cap of $126.7 million and is part of the financial services industry. Shares are up 15% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

OFS Capital

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, solid stock price performance, compelling growth in net income and expanding profit margins. 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 1.8%. Since the same quarter one year prior, revenues rose by 27.6%. Growth in the company's revenue appears to have helped boost 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, OFS CAPITAL CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • 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. 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.
  • 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 76.6% when compared to the same quarter one year prior, rising from $3.50 million to $6.18 million.
  • The gross profit margin for OFS CAPITAL CORP is rather high; currently it is at 63.59%. Regardless of OFS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OFS's net profit margin of 69.60% significantly outperformed against the industry.

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BlackRock Capital Investment

Dividend Yield: 8.90%

BlackRock Capital Investment

(NASDAQ:

BKCC

) shares currently have a dividend yield of 8.90%.

BlackRock Capital Investment Corporation, formerly known as BlackRock Kelso Capital Corporation, is a Business Development Company specializing in investments in middle market companies. The fund invests in all industries. The company has a P/E ratio of 6.62.

The average volume for BlackRock Capital Investment has been 387,600 shares per day over the past 30 days. BlackRock Capital Investment has a market cap of $689.2 million and is part of the financial services industry. Shares are up 0.7% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

TheStreet Recommends

BlackRock Capital Investment

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, solid stock price performance and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • BKCC's revenue growth has slightly outpaced the industry average of 1.8%. Since the same quarter one year prior, revenues slightly increased by 2.3%. 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 BLACKROCK CAPITAL INVT CORP is currently very high, coming in at 88.43%. It has increased significantly from the same period last year. Along with this, the net profit margin of 64.01% significantly outperformed against the industry average.
  • 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.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. 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.
  • BLACKROCK CAPITAL INVT CORP's earnings per share declined by 22.2% in the most recent quarter compared to 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, BLACKROCK CAPITAL INVT CORP increased its bottom line by earning $1.70 versus $1.20 in the prior year. For the next year, the market is expecting a contraction of 40.6% in earnings ($1.01 versus $1.70).

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Collectors Universe

Dividend Yield: 8.70%

Collectors Universe

(NASDAQ:

CLCT

) shares currently have a dividend yield of 8.70%.

Collectors Universe Inc. provides third-party authentication, grading, and related services for rare and high-value collectibles consisting of coins, trading cards, sports memorabilia, and autographs. The company has a P/E ratio of 20.12.

The average volume for Collectors Universe has been 31,800 shares per day over the past 30 days. Collectors Universe has a market cap of $143.3 million and is part of the diversified services industry. Shares are up 6.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Collectors Universe

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 has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:

  • CLCT 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 the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.30, which illustrates the ability to avoid short-term cash problems.
  • 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 Diversified Consumer Services industry and the overall market, COLLECTORS UNIVERSE INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for COLLECTORS UNIVERSE INC is rather high; currently it is at 63.19%. Regardless of CLCT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CLCT's net profit margin of 7.82% compares favorably to the industry average.
  • CLCT, with its decline in revenue, underperformed when compared the industry average of 0.6%. Since the same quarter one year prior, revenues fell by 10.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Diversified Consumer Services industry average, but is less than that of the S&P 500. The net income has significantly decreased by 40.2% when compared to the same quarter one year ago, falling from $1.66 million to $0.99 million.

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