Buy-Rated Dividend Stocks In The Top 3: ARI, BKCC, CLCT - TheStreet

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."

Apollo Commercial Real Estate Finance

Dividend Yield: 10.10%

Apollo Commercial Real Estate Finance

(NYSE:

ARI

) shares currently have a dividend yield of 10.10%.

Apollo Commercial Real Estate Finance, Inc. The company has a P/E ratio of 10.48.

The average volume for Apollo Commercial Real Estate Finance has been 400,400 shares per day over the past 30 days. Apollo Commercial Real Estate Finance has a market cap of $1.2 billion and is part of the real estate industry. Shares are up 7.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Apollo Commercial Real Estate Finance

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, 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 6.1%. Since the same quarter one year prior, revenues rose by 48.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.
  • APOLLO COMMERCIAL RE FIN INC has improved earnings per share by 5.4% 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, APOLLO COMMERCIAL RE FIN INC increased its bottom line by earning $1.73 versus $1.26 in the prior year. This year, the market expects an improvement in earnings ($1.90 versus $1.73).
  • 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 34.9% when compared to the same quarter one year prior, rising from $19.16 million to $25.85 million.

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BlackRock Capital Investment

Dividend Yield: 8.60%

BlackRock Capital Investment

(NASDAQ:

BKCC

) shares currently have a dividend yield of 8.60%.

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 6.85.

The average volume for BlackRock Capital Investment has been 314,400 shares per day over the past 30 days. BlackRock Capital Investment has a market cap of $726.8 million and is part of the financial services industry. Shares are up 19.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

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 5.6%. 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.
  • 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, despite 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 43.5% in earnings ($0.96 versus $1.70).

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Collectors Universe

Dividend Yield: 8.80%

Collectors Universe

(NASDAQ:

CLCT

) shares currently have a dividend yield of 8.80%.

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 17.87.

The average volume for Collectors Universe has been 26,500 shares per day over the past 30 days. Collectors Universe has a market cap of $141.2 million and is part of the diversified services industry. Shares are down 23.8% year-to-date as of the close of trading on Friday.

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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 increase in net income, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and growth in earnings per share. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

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 Diversified Consumer Services industry. The net income increased by 7.0% when compared to the same quarter one year prior, going from $1.80 million to $1.93 million.
  • 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 1.50, which illustrates the ability to avoid short-term cash problems.
  • 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 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 67.12%. It has increased from the same quarter the previous year.
  • CLCT, with its decline in revenue, underperformed when compared the industry average of 14.7%. Since the same quarter one year prior, revenues slightly dropped by 9.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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