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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."

Alon USA Partners

Dividend Yield: 15.60%

Alon USA Partners

(NYSE:

ALDW

) shares currently have a dividend yield of 15.60%.

Alon USA Partners, LP refines and markets petroleum products primarily in the South Central and Southwestern regions of the United States. The company owns and operates a crude oil refinery in Big Spring, Texas with crude oil throughput capacity of 73,000 barrels per day. The company has a P/E ratio of 8.16.

The average volume for Alon USA Partners has been 183,300 shares per day over the past 30 days. Alon USA Partners has a market cap of $1.6 billion and is part of the energy industry. Shares are up 94% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Alon USA Partners

TheStreet Recommends

as a

buy

. The company's strengths can be seen in multiple areas, such as its solid stock price performance and notable return on equity. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • Compared to its closing price of one year ago, ALDW's share price has jumped by 41.45%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ALDW should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ALON USA PARTNERS LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • ALON USA PARTNERS LP's earnings per share declined by 30.1% 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, ALON USA PARTNERS LP increased its bottom line by earning $2.70 versus $2.19 in the prior year. This year, the market expects an improvement in earnings ($2.82 versus $2.70).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 36.8%. Since the same quarter one year prior, revenues fell by 34.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 30.1% when compared to the same quarter one year ago, falling from $76.99 million to $53.78 million.

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OFS Capital

Dividend Yield: 12.40%

OFS Capital

(NASDAQ:

OFS

) shares currently have a dividend yield of 12.40%.

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 9.77.

The average volume for OFS Capital has been 27,600 shares per day over the past 30 days. OFS Capital has a market cap of $106.0 million and is part of the financial services industry. Shares are down 7.1% year-to-date as of the close of trading on Wednesday.

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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, 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 sub par growth in net income.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 24.1%. 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.
  • OFS CAPITAL 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, OFS CAPITAL CORP increased its bottom line by earning $1.03 versus $0.81 in the prior year. This year, the market expects an improvement in earnings ($1.29 versus $1.03).
  • Net operating cash flow has significantly increased by 129.99% to $9.08 million when compared to the same quarter last year. Despite an increase in cash flow of 129.99%, OFS CAPITAL CORP is still growing at a significantly lower rate than the industry average of 270.33%.
  • The gross profit margin for OFS CAPITAL CORP is rather high; currently it is at 63.25%. Regardless of OFS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OFS's net profit margin of 18.48% compares favorably to the industry average.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Capital Markets industry and the overall market, OFS CAPITAL CORP's return on equity is below that of both the industry average and the S&P 500.

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Highway Holdings

Dividend Yield: 8.50%

Highway Holdings

(NASDAQ:

HIHO

) shares currently have a dividend yield of 8.50%.

Highway Holdings Limited, through its subsidiaries, manufactures and sells metal, plastic, electric, and electronic components, subassemblies, and finished products for original equipment manufacturers (OEM) and contract manufacturers. The company has a P/E ratio of 29.25.

The average volume for Highway Holdings has been 25,700 shares per day over the past 30 days. Highway Holdings has a market cap of $17.8 million and is part of the industrial industry. Shares are up 67.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Highway Holdings

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, solid stock price performance, increase in net income and attractive valuation levels. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 19.3%. Since the same quarter one year prior, revenues slightly increased by 4.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • HIHO 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. To add to this, HIHO has a quick ratio of 2.47, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Compared to its closing price of one year ago, HIHO's share price has jumped by 48.47%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HIHO should continue to move higher despite the fact that it has already enjoyed a very nice gain 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 Machinery industry. The net income increased by 5.6% when compared to the same quarter one year prior, going from $0.37 million to $0.39 million.

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