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."

BlackRock Capital Investment

Dividend Yield: 9.30%

BlackRock Capital Investment

(NASDAQ:

BKCC

) shares currently have a dividend yield of 9.30%.

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 6.33.

The average volume for BlackRock Capital Investment has been 347,100 shares per day over the past 30 days. BlackRock Capital Investment has a market cap of $675.8 million and is part of the financial services industry. Shares are up 10.4% year-to-date as of the close of trading on Wednesday.

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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 notable return on equity, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • 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, BLACKROCK CAPITAL INVT CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for BLACKROCK CAPITAL INVT CORP is currently very high, coming in at 74.60%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 44.97% 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.
  • BKCC, with its decline in revenue, slightly underperformed the industry average of 6.9%. Since the same quarter one year prior, revenues slightly dropped by 2.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • BLACKROCK CAPITAL INVT CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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 46.5% in earnings ($0.91 versus $1.70).

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NVE

Dividend Yield: 8.10%

NVE

(NASDAQ:

NVEC

) shares currently have a dividend yield of 8.10%.

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 17.01.

The average volume for NVE has been 28,200 shares per day over the past 30 days. NVE has a market cap of $240.8 million and is part of the electronics industry. Shares are down 30.1% year-to-date as of the close of trading on Wednesday.

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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. The firm also exceeded the industry average cash flow growth rate of -23.18%.
  • 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.
  • Despite the weak revenue results, NVEC has outperformed against the industry average of 11.7%. 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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THL Credit

Dividend Yield: 11.80%

THL Credit

(NASDAQ:

TCRD

) shares currently have a dividend yield of 11.80%.

THL Credit, Inc. is a business development company specializing in direct and fund of fund investments. The fund seeks to invest in debt and equity securities of middle market companies. The company has a P/E ratio of 9.16.

The average volume for THL Credit has been 138,700 shares per day over the past 30 days. THL Credit has a market cap of $387.8 million and is part of the financial services industry. Shares are down 1.9% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

THL Credit

as a

buy

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, expanding profit margins, impressive record of earnings per share growth 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:

  • 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 51.4% when compared to the same quarter one year prior, rising from $9.28 million to $14.06 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.9%. Since the same quarter one year prior, revenues slightly increased by 0.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for THL CREDIT INC is rather high; currently it is at 65.32%. Regardless of TCRD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TCRD's net profit margin of 59.18% significantly outperformed against the industry.
  • THL CREDIT INC 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, THL CREDIT INC reported lower earnings of $1.07 versus $1.45 in the prior year. This year, the market expects an improvement in earnings ($1.40 versus $1.07).
  • 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, THL CREDIT INC's return on equity is below that of both the industry average and the S&P 500.

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