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."

PennantPark Floating Rate Capital

Dividend Yield: 9.50%

PennantPark Floating Rate Capital

(NASDAQ:

PFLT

) shares currently have a dividend yield of 9.50%.

PennantPark Floating Rate Capital Ltd. is a business development company. It seeks to make secondary direct, debt, equity, and loan investments. The fund seeks to invest through floating rate loans in private or thinly traded or small market-cap, public middle market companies. The company has a P/E ratio of 8.83.

The average volume for PennantPark Floating Rate Capital has been 99,100 shares per day over the past 30 days. PennantPark Floating Rate Capital has a market cap of $321.3 million and is part of the financial services industry. Shares are up 7.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

PennantPark Floating Rate Capital

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, growth in earnings per share and expanding profit margins. 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 came in higher than the industry average of 2.5%. Since the same quarter one year prior, revenues rose by 17.1%. 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 significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 298.9% when compared to the same quarter one year prior, rising from $0.44 million to $1.75 million.
  • PENNANTPARK FLOATING RT CAP 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, PENNANTPARK FLOATING RT CAP reported lower earnings of $0.82 versus $1.38 in the prior year. This year, the market expects an improvement in earnings ($1.03 versus $0.82).
  • The gross profit margin for PENNANTPARK FLOATING RT CAP is currently very high, coming in at 79.18%. Regardless of PFLT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PFLT's net profit margin of 19.94% compares favorably to the industry average.
  • PFLT has underperformed the S&P 500 Index, declining 15.11% 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.

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AllianceBernstein

Dividend Yield: 8.40%

AllianceBernstein

(NYSE:

AB

) shares currently have a dividend yield of 8.40%.

AllianceBernstein Holding L.P. is publicly owned investment manager. The firm also provides research services to its clients. The company has a P/E ratio of 11.46.

The average volume for AllianceBernstein has been 294,800 shares per day over the past 30 days. AllianceBernstein has a market cap of $2.4 billion and is part of the financial services industry. Shares are up 1.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

TheStreet Recommends

AllianceBernstein

as a

buy

. The company's strengths can be seen in multiple areas, such as its expanding profit margins 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:

  • The gross profit margin for ALLIANCEBERNSTEIN HOLDING LP is currently very high, coming in at 100.00%. AB has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, AB's net profit margin of 89.90% significantly outperformed against the industry.
  • 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, ALLIANCEBERNSTEIN HOLDING LP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • AB, with its decline in revenue, slightly underperformed the industry average of 2.5%. Since the same quarter one year prior, revenues slightly dropped by 9.6%. 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 exceeded that of the S&P 500 and greatly outperformed compared to the Capital Markets industry average. The net income has decreased by 10.4% when compared to the same quarter one year ago, dropping from $57.67 million to $51.68 million.
  • ALLIANCEBERNSTEIN HOLDING LP's earnings per share declined by 10.2% 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, ALLIANCEBERNSTEIN HOLDING LP increased its bottom line by earning $1.89 versus $1.86 in the prior year. For the next year, the market is expecting a contraction of 2.6% in earnings ($1.84 versus $1.89).

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Collectors Universe

Dividend Yield: 8.30%

Collectors Universe

(NASDAQ:

CLCT

) shares currently have a dividend yield of 8.30%.

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 22.02.

The average volume for Collectors Universe has been 29,200 shares per day over the past 30 days. Collectors Universe has a market cap of $150.2 million and is part of the diversified services industry. Shares are up 13.4% year-to-date as of the close of trading on Thursday.

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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 0.1%. 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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