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."

Compass Diversified Holdings

Dividend Yield: 8.60%

Compass Diversified Holdings

(NYSE:

CODI

) shares currently have a dividend yield of 8.60%.

Compass Diversified Holdings is a private equity firm specializing in acquisitions, buyouts, and middle market investments. It seeks to invest in manufacturing, distribution, consumer products, and business services sectors. The firm prefers to invest in companies based in North America.

The average volume for Compass Diversified Holdings has been 99,600 shares per day over the past 30 days. Compass Diversified Holdings has a market cap of $910.1 million and is part of the conglomerates industry. Shares are up 6% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Compass Diversified Holdings

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • CODI's revenue growth has slightly outpaced the industry average of 7.7%. Since the same quarter one year prior, revenues rose by 15.9%. Growth in the company's revenue appears to have helped boost 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 Diversified Financial Services industry. The net income increased by 35.3% when compared to the same quarter one year prior, rising from -$24.76 million to -$16.02 million.
  • Net operating cash flow has significantly increased by 83.29% to $6.03 million when compared to the same quarter last year. In addition, COMPASS DIVERSIFIED HOLDINGS has also vastly surpassed the industry average cash flow growth rate of 25.45%.
  • Despite currently having a low debt-to-equity ratio of 0.39, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that CODI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.83 is high and demonstrates strong liquidity.
  • After a year of stock price fluctuations, the net result is that CODI's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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.

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Gladstone Investment

Dividend Yield: 10.10%

Gladstone Investment

(NASDAQ:

GAIN

) shares currently have a dividend yield of 10.10%.

Gladstone Investment Corporation is a business development company specializing in buyouts; recapitalizations; refinancing existing debt; senior debt securities; junior subordinated debt securities; limited liability company interests, and warrants or options. The company has a P/E ratio of 52.86.

The average volume for Gladstone Investment has been 182,700 shares per day over the past 30 days. Gladstone Investment has a market cap of $224.0 million and is part of the financial services industry. Shares are down 2.9% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

TheStreet Recommends

Gladstone Investment

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 weak growth in earnings per share.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 23.7%. Since the same quarter one year prior, revenues rose by 11.3%. 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.
  • Net operating cash flow has significantly increased by 96.85% to -$1.29 million when compared to the same quarter last year. In addition, GLADSTONE INVESTMENT CORP/DE has also vastly surpassed the industry average cash flow growth rate of -199.57%.
  • The gross profit margin for GLADSTONE INVESTMENT CORP/DE is rather high; currently it is at 68.15%. Regardless of GAIN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GAIN's net profit margin of 181.80% significantly outperformed against the industry.
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Capital Markets industry average, but is less than that of the S&P 500. The net income has decreased by 22.4% when compared to the same quarter one year ago, dropping from $29.16 million to $22.62 million.
  • The share price of GLADSTONE INVESTMENT CORP/DE has not done very well: it is down 9.39% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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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Grupo Aeroportuario del Centro Norte SAB de

Dividend Yield: 17.30%

Grupo Aeroportuario del Centro Norte SAB de

(NASDAQ:

OMAB

) shares currently have a dividend yield of 17.30%.

Grupo Aeroportuario del Centro Norte, S.A.B. de C.V., through its subsidiaries, develops, operates, and maintains airports in Mexico. It also operates NH T2 Hotel in Terminal 2 of the Mexico City International Airport. The company has a P/E ratio of 32.57.

The average volume for Grupo Aeroportuario del Centro Norte SAB de has been 39,600 shares per day over the past 30 days. Grupo Aeroportuario del Centro Norte SAB de has a market cap of $2.3 billion and is part of the transportation industry. Shares are up 22.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Grupo Aeroportuario del Centro Norte SAB de

as a

buy

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, notable return on equity, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • 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. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • GRUPO AEROPORTUARIO DEL CENT has improved earnings per share by 29.4% 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 year. We feel that this trend should continue. During the past fiscal year, GRUPO AEROPORTUARIO DEL CENT increased its bottom line by earning $1.46 versus $1.40 in the prior year. This year, the market expects an improvement in earnings ($1.90 versus $1.46).
  • 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. In comparison to the other companies in the Transportation Infrastructure industry and the overall market, GRUPO AEROPORTUARIO DEL CENT's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • The gross profit margin for GRUPO AEROPORTUARIO DEL CENT is currently very high, coming in at 72.73%. It has increased significantly from the same period last year. Along with this, the net profit margin of 33.03% significantly outperformed against the industry average.
  • OMAB's debt-to-equity ratio of 0.75 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.57 is very high and demonstrates very strong liquidity.

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