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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."

Golub Capital BDC

Dividend Yield: 7.70%

Golub Capital BDC

(NASDAQ:

GBDC

) shares currently have a dividend yield of 7.70%.

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 11.50.

The average volume for Golub Capital BDC has been 154,400 shares per day over the past 30 days. Golub Capital BDC has a market cap of $848.9 million and is part of the financial services industry. Shares are down 8% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Golub Capital BDC

TheStreet Recommends

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, good cash flow from operations, expanding profit margins and notable return on equity. 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:

  • GBDC's revenue growth has slightly outpaced the industry average of 6.8%. Since the same quarter one year prior, revenues rose by 12.7%. 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 26.8% when compared to the same quarter one year prior, rising from $14.09 million to $17.86 million.
  • Net operating cash flow has significantly increased by 85.15% to -$9.49 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 -505.86%.
  • The gross profit margin for GOLUB CAPITAL BDC INC is rather high; currently it is at 69.47%. 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 62.75% 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, GOLUB CAPITAL BDC INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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NVE

Dividend Yield: 7.10%

NVE

(NASDAQ:

NVEC

) shares currently have a dividend yield of 7.10%.

NVE Corporation develops and sells devices using spintronics, a nanotechnology that utilizes electron spin rather than electron charge to acquire, store, and transmit information. The company has a P/E ratio of 19.46.

The average volume for NVE has been 27,800 shares per day over the past 30 days. NVE has a market cap of $275.5 million and is part of the electronics industry. Shares are down 19.6% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

NVE

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, good cash flow from operations, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • NVEC 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 this, the company maintains a quick ratio of 13.53, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has increased to $5.17 million or 15.39% when compared to the same quarter last year. In addition, NVE CORP has also vastly surpassed the industry average cash flow growth rate of -43.55%.
  • The gross profit margin for NVE CORP is currently very high, coming in at 78.52%. Regardless of NVEC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NVEC's net profit margin of 45.70% significantly outperformed against the industry.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.6%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing 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 Semiconductors & Semiconductor Equipment industry and the overall market, NVE CORP's return on equity is below that of both the industry average and the S&P 500.

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Evolving Systems

Dividend Yield: 7.10%

Evolving Systems

(NASDAQ:

EVOL

) shares currently have a dividend yield of 7.10%.

Evolving Systems, Inc. provides software solutions and services to the wireless, wireline, and cable markets in the United Kingdom, Nigeria, Mexico, and internationally. The company has a P/E ratio of 15.22.

The average volume for Evolving Systems has been 22,500 shares per day over the past 30 days. Evolving Systems has a market cap of $72.9 million and is part of the computer software & services industry. Shares are down 32.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Evolving Systems

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels 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:

  • The revenue growth came in higher than the industry average of 12.0%. Since the same quarter one year prior, revenues slightly increased by 1.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • EVOL's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, EVOL has a quick ratio of 1.86, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 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 Software industry and the overall market, EVOLVING SYSTEMS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for EVOLVING SYSTEMS INC is currently very high, coming in at 75.78%. It has increased from the same quarter the previous year.

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