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."

OFS Capital

Dividend Yield: 10.00%

OFS Capital

(NASDAQ:

OFS

) shares currently have a dividend yield of 10.00%.

OFS Capital Corporation is a business development company specializing in direct and fund investments. For direct, it specializes in debt and structured equity investments in lower middle market companies. The fund invests in companies based in United States. The company has a P/E ratio of 7.18.

The average volume for OFS Capital has been 54,100 shares per day over the past 30 days. OFS Capital has a market cap of $131.5 million and is part of the financial services industry. Shares are up 17.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

OFS Capital

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, solid stock price performance, compelling growth in net income and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 24.5%. Since the same quarter one year prior, revenues rose by 27.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 Capital Markets industry and the overall market, OFS CAPITAL CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • 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. 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 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 76.6% when compared to the same quarter one year prior, rising from $3.50 million to $6.18 million.
  • Net operating cash flow has significantly increased by 89.55% to -$5.31 million when compared to the same quarter last year. In addition, OFS CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of -198.91%.

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Manhattan Bridge Capital

Dividend Yield: 8.00%

Manhattan Bridge Capital

(NASDAQ:

LOAN

) shares currently have a dividend yield of 8.00%.

Manhattan Bridge Capital, Inc., a real estate finance company, originates, services, and manages a portfolio of first mortgage loans in the United States. The company has a P/E ratio of 14.45.

The average volume for Manhattan Bridge Capital has been 24,700 shares per day over the past 30 days. Manhattan Bridge Capital has a market cap of $32.6 million and is part of the financial services industry. Shares are up 0.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Manhattan Bridge Capital

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, compelling growth in net income, notable return on equity and attractive valuation levels. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 7.7%. Since the same quarter one year prior, revenues rose by 21.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MANHATTAN BRIDGE CAPITAL INC has improved earnings per share by 25.0% 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, MANHATTAN BRIDGE CAPITAL INC increased its bottom line by earning $0.33 versus $0.29 in the prior year. This year, the market expects an improvement in earnings ($0.40 versus $0.33).
  • 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 46.0% when compared to the same quarter one year prior, rising from $0.48 million to $0.70 million.
  • 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 Diversified Financial Services industry and the overall market, MANHATTAN BRIDGE CAPITAL INC's return on equity exceeds that of both the industry average and 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 22.42.

The average volume for NVE has been 10,000 shares per day over the past 30 days. NVE has a market cap of $274.2 million and is part of the electronics industry. Shares are up 1.2% 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 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:

  • 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 18.55, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for NVE CORP is currently very high, coming in at 79.56%. 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 42.63% significantly outperformed against the industry.
  • NVEC, with its decline in revenue, underperformed when compared the industry average of 3.3%. Since the same quarter one year prior, revenues fell by 19.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 Semiconductors & Semiconductor Equipment industry and the overall market on the basis of return on equity, NVE CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The share price of NVE CORP has not done very well: it is down 19.90% 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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