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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."

Apollo Commercial Real Estate Finance

Dividend Yield: 10.50%

Apollo Commercial Real Estate Finance

(NYSE:

ARI

) shares currently have a dividend yield of 10.50%.

Apollo Commercial Real Estate Finance, Inc. The company has a P/E ratio of 9.27.

The average volume for Apollo Commercial Real Estate Finance has been 413,500 shares per day over the past 30 days. Apollo Commercial Real Estate Finance has a market cap of $975.2 million and is part of the real estate industry. Shares are up 3% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Apollo Commercial Real Estate Finance

TheStreet Recommends

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, expanding profit margins, good cash flow from operations and increase in net income. 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:

  • ARI's very impressive revenue growth greatly exceeded the industry average of 9.8%. Since the same quarter one year prior, revenues leaped by 55.4%. 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.
  • The gross profit margin for APOLLO COMMERCIAL RE FIN INC is currently very high, coming in at 86.82%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 54.64% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $23.08 million or 46.80% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 16.24%.
  • APOLLO COMMERCIAL RE FIN INC's earnings per share declined by 23.5% 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, APOLLO COMMERCIAL RE FIN INC increased its bottom line by earning $1.73 versus $1.26 in the prior year. This year, the market expects an improvement in earnings ($1.83 versus $1.73).

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BlackRock Capital Investment

Dividend Yield: 9.10%

BlackRock Capital Investment

(NASDAQ:

BKCC

) shares currently have a dividend yield of 9.10%.

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 6.48.

The average volume for BlackRock Capital Investment has been 337,100 shares per day over the past 30 days. BlackRock Capital Investment has a market cap of $691.5 million and is part of the financial services industry. Shares are up 13.2% year-to-date as of the close of trading on Tuesday.

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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.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.0%. 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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Compass Diversified Holdings

Dividend Yield: 8.50%

Compass Diversified Holdings

(NYSE:

CODI

) shares currently have a dividend yield of 8.50%.

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 company has a P/E ratio of 3.31.

The average volume for Compass Diversified Holdings has been 126,700 shares per day over the past 30 days. Compass Diversified Holdings has a market cap of $921.5 million and is part of the conglomerates industry. Shares are up 1.9% year-to-date as of the close of trading on Tuesday.

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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 revenue growth, compelling growth in net income, notable return on equity, attractive valuation levels and good cash flow from operations. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • CODI's revenue growth has slightly outpaced the industry average of 3.2%. Since the same quarter one year prior, revenues slightly increased by 5.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 Diversified Financial Services industry and the overall market, COMPASS DIVERSIFIED HOLDINGS's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 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 327.6% when compared to the same quarter one year prior, rising from $5.72 million to $24.46 million.
  • Net operating cash flow has significantly increased by 66.93% to $28.98 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 15.56%.

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