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."

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 32.68.

The average volume for Grupo Aeroportuario del Centro Norte SAB de has been 40,600 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 22.4% year-to-date as of the close of trading on Friday.

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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 ($1.88 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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Newtek Business Services

Dividend Yield: 10.80%

Newtek Business Services

(NASDAQ:

NEWT

) shares currently have a dividend yield of 10.80%.

Newtek Business Services Corp. is a business development company specializing in providing financial and business services to the small-and medium-sized business market in the United States. The firm also seeks to invest in early stage businesses.

The average volume for Newtek Business Services has been 85,000 shares per day over the past 30 days. Newtek Business Services has a market cap of $187.1 million and is part of the diversified services industry. Shares are down 9.8% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

TheStreet Recommends

Newtek Business Services

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations and expanding profit margins. 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 revenue growth greatly exceeded the industry average of 23.7%. Since the same quarter one year prior, revenues rose by 43.0%. 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.
  • 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, NEWTEK BUSINESS SERVICES CP's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 184.28% to $8.79 million when compared to the same quarter last year. In addition, NEWTEK BUSINESS SERVICES CP has also vastly surpassed the industry average cash flow growth rate of -199.13%.
  • The gross profit margin for NEWTEK BUSINESS SERVICES CP is currently extremely low, coming in at 2.18%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, NEWT's net profit margin of 82.48% significantly outperformed against the industry.
  • NEWTEK BUSINESS SERVICES CP 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, NEWTEK BUSINESS SERVICES CP increased its bottom line by earning $3.23 versus $0.59 in the prior year. For the next year, the market is expecting a contraction of 48.6% in earnings ($1.66 versus $3.23).

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Gladstone Investment

Dividend Yield: 10.40%

Gladstone Investment

(NASDAQ:

GAIN

) shares currently have a dividend yield of 10.40%.

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 51.64.

The average volume for Gladstone Investment has been 172,900 shares per day over the past 30 days. Gladstone Investment has a market cap of $218.9 million and is part of the financial services industry. Shares are down 5.7% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

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 -199.13%.
  • 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 9.94% 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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