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: 10.80%

TCP Capital

(NASDAQ:

TCPC

) shares currently have a dividend yield of 10.80%.

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 8.69.

The average volume for TCP Capital has been 189,200 shares per day over the past 30 days. TCP Capital has a market cap of $653.4 million and is part of the financial services industry. Shares are down 3.3% year-to-date as of the close of trading on Friday.

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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 5.6%. 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 276.16%.
  • 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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One Liberty Properties

Dividend Yield: 8.10%

One Liberty Properties

(NYSE:

OLP

) shares currently have a dividend yield of 8.10%.

One Liberty Properties, Inc., a real estate investment trust (REIT), engages in the acquisition, ownership, and management of commercial real estate properties in the United States. The company has a P/E ratio of 12.07.

The average volume for One Liberty Properties has been 41,000 shares per day over the past 30 days. One Liberty Properties has a market cap of $339.4 million and is part of the real estate industry. Shares are down 7.2% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

One Liberty Properties

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, reasonable valuation levels, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • OLP's revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 7.1%. 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 Real Estate Investment Trusts (REITs) industry. The net income increased by 44.6% when compared to the same quarter one year prior, rising from $2.62 million to $3.79 million.
  • Net operating cash flow has increased to $8.86 million or 30.06% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 9.39%.
  • The gross profit margin for ONE LIBERTY PROPERTIES INC is rather high; currently it is at 65.81%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 23.06% trails the industry average.

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Newtek Business Services

Dividend Yield: 13.80%

Newtek Business Services

(NASDAQ:

NEWT

) shares currently have a dividend yield of 13.80%.

Newtek Business Services Corp., a business development company, provides financial and business services to the small-and medium-sized business market in the United States and internationally.

The average volume for Newtek Business Services has been 124,000 shares per day over the past 30 days. Newtek Business Services has a market cap of $146.9 million and is part of the diversified services industry. Shares are down 18.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Newtek Business Services

as a

buy

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, impressive record of earnings per share growth 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 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 79.6% when compared to the same quarter one year prior, rising from $2.64 million to $4.75 million.
  • NEWTEK BUSINESS SERVICES CP has improved earnings per share by 31.4% 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, NEWTEK BUSINESS SERVICES CP reported lower earnings of $0.59 versus $1.00 in the prior year. This year, the market expects an improvement in earnings ($1.92 versus $0.59).
  • NEWT, with its very weak revenue results, has greatly underperformed against the industry average of 5.6%. Since the same quarter one year prior, revenues plummeted by 81.5%. The declining revenue has not hurt the company's bottom line, with increasing 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. When compared to other companies in the Capital Markets industry and the overall market, NEWTEK BUSINESS SERVICES CP's return on equity is below that of both the industry average and the S&P 500.
  • NEWT has underperformed the S&P 500 Index, declining 19.94% 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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