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."

TCP Capital

Dividend Yield: 10.10%

TCP Capital

(NASDAQ:

TCPC

) shares currently have a dividend yield of 10.10%.

TCP Capital Corp. is a business development company specializing in direct equity and debt investments in middle-market, senior secured loans, junior loans, originated loans, mezzanine, senior debt instruments, bonds, and secondary-market investments. It seeks to invest in the United States. The company has a P/E ratio of 9.19.

The average volume for TCP Capital has been 184,800 shares per day over the past 30 days. TCP Capital has a market cap of $695.9 million and is part of the financial services industry. Shares are up 2.1% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

TCP Capital

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, expanding profit margins, good cash flow from operations and growth in earnings per share. 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 5.7%. Since the same quarter one year prior, revenues rose by 30.6%. 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 48.2% when compared to the same quarter one year prior, rising from $11.83 million to $17.53 million.
  • The gross profit margin for TCP CAPITAL CORP is currently very high, coming in at 80.42%. Regardless of TCPC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TCPC's net profit margin of 49.38% significantly outperformed against the industry.
  • Net operating cash flow has significantly increased by 76.23% to -$38.35 million when compared to the same quarter last year. Despite an increase in cash flow of 76.23%, TCP CAPITAL CORP is still growing at a significantly lower rate than the industry average of 272.65%.
  • TCP CAPITAL CORP has improved earnings per share by 24.1% 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, TCP CAPITAL CORP reported lower earnings of $0.96 versus $1.94 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $0.96).

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Golub Capital BDC

Dividend Yield: 7.60%

Golub Capital BDC

(NASDAQ:

GBDC

) shares currently have a dividend yield of 7.60%.

Golub Capital BDC, Inc. is a business development company and operates as an externally managed closed-end non-diversified management investment company. It invests in debt and minority equity investments in middle-market companies that are, in most cases, sponsored by private equity investors. The company has a P/E ratio of 11.68.

The average volume for Golub Capital BDC has been 159,200 shares per day over the past 30 days. Golub Capital BDC has a market cap of $862.9 million and is part of the financial services industry. Shares are up 0.7% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Golub Capital BDC

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations 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 5.7%. Since the same quarter one year prior, revenues slightly increased by 9.4%. 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.
  • Net operating cash flow has significantly increased by 6708.33% to $67.41 million when compared to the same quarter last year. In addition, GOLUB CAPITAL BDC INC has also vastly surpassed the industry average cash flow growth rate of 272.65%.
  • The gross profit margin for GOLUB CAPITAL BDC INC is rather high; currently it is at 65.98%. Regardless of GBDC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GBDC's net profit margin of 58.02% significantly outperformed against the industry.
  • 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 3.5% when compared to the same quarter one year ago, dropping from $20.18 million to $19.47 million.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, GBDC has underperformed the S&P 500 Index, declining 6.23% 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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Manhattan Bridge Capital

Dividend Yield: 7.90%

Manhattan Bridge Capital

(NASDAQ:

LOAN

) shares currently have a dividend yield of 7.90%.

Manhattan Bridge Capital, Inc., a real estate finance company, originates, services, and manages a portfolio of first mortgage loans in the United States. The company has a P/E ratio of 13.38.

The average volume for Manhattan Bridge Capital has been 18,800 shares per day over the past 30 days. Manhattan Bridge Capital has a market cap of $31.0 million and is part of the financial services industry. Shares are down 3.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Manhattan Bridge Capital

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, growth in earnings per share, attractive valuation levels and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 15.2%. Since the same quarter one year prior, revenues rose by 34.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 25.20% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, LOAN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • MANHATTAN BRIDGE CAPITAL INC has improved earnings per share by 12.5% 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 two years. We feel that this trend should continue. During the past fiscal year, MANHATTAN BRIDGE CAPITAL INC increased its bottom line by earning $0.29 versus $0.15 in the prior year. This year, the market expects an improvement in earnings ($0.34 versus $0.29).
  • The gross profit margin for MANHATTAN BRIDGE CAPITAL INC is currently very high, coming in at 77.79%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 61.97% significantly outperformed against the industry average.

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